Income Tax Filing FAQ for Foreigners in China 外国人所得税申报常见问题

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Tax season is here. In China, taxes must be filed before June 30th. As a foreigner, you might be wondering how to file a tax return and what the regulations are. Luckily China has made it easy by creating an online tax filing system that you can complete from your computer or phone. Let us answer some common questions about tax filing that might come up:

Preface: The following is Q+A for tax year 2023 only, based on information provided on China's State Taxation Administration website for your reference only. Personal income tax can be a complicated issue; for specific answers regarding your tax situation please contact the China tax hotline: +866-12366. The ultimate decision for tax payable is up to the discretion of the China tax office.

​Q: When should I file taxes?
A: Between March 1st to June 30th after the tax year (tax year is same as calendar year).

Q: When are China tax payments due?
A: Tax payments are due by May 31st, after which there will be penalties for late payments. 
 
Q: What makes me eligible for paying Chinese taxes (or what makes me a tax resident)?
A: You become a China tax resident if you stay in China longer than 183 days, or if you are a China national and have household registration (戶籍). If you stay more than 183 days each year for six consecutive years, then you are subject to Chinese tax on your worldwide income. 
If you stay less than 90 days in China, in general, you do not have to file taxes, and VAT or sales taxes are reimbursable.
If your country has a double tax agreement with China (such as the USA), then the 90 days can be extended to 183 days. 
If you worked in China and stayed over 90 days but less than 183 days and your home country does not have a double tax agreement with China, you need to pay taxes on your China-based salary even if your income came from overseas, and you will pay a fixed rate of 6% or 18% income tax (your company may have deducted this from your salary already).
​
Q: How do I count the days I stayed in China?
A: Please note that the day you come to China doesn't count, but the day you leave does. It's a good idea to keep track of the number of days you have been in China via the stamps on your passport.

​Q: What is the income tax rate?/ How much is China's income tax rate?
A: The income tax rate for ranges from 3% to 45% depending on the income amount. See the table below for details. 

China 2023 Progressive Tax Rate Table (for Tax Residents): 

Annual taxable income after deductions (RMB)	IIT (%)	Quick Reckon Deduction (RMB)
36,000	3	Value
36,001 – 144,000	10	2,520
144,001 – 300,000	20	16,920
300,001 – 420,000	25	31,920
420,001 – 660,000	30	52,920
660,001 – 960,000	35	85,920
Over 960,000	45	181,920

Q: Are there tax exemptions?
A: Yes, there is a fixed deduction of RMB 5,000 per month for non-tax residents and a fixed deduction of 60,000 RMB per year for tax residents. 

Q: Are there tax deductions?
A: Yes, there are tax deductions available for rent, dependent children and parents, education fees, and  infants under the age of 3. See the list below:

• Child education: up to 2,000 RMB per child
• Continued education: 400 RMB per month
• Mortgage interest: 1,000 RMB per month
• Rent: 800-1,500 RMB depending on location
• Elderly parents: up to 3,000 RMB per month
• Medical expenses: capped at 80,000 RMB per year per individual
• Children under the age of 3: 2,000 RMB per child

​Q: What non-taxable fringe benefits can employers give to employees?
A: There are a number of tax-deductible fringe benefits available to foreign professionals such as housing and schooling allowances. For more information on how to implement these tax benefits, please contact a China tax professional.

Q: How do I compute tax in China?/ How do I compute a tax refund in China?/ How do I calculate income tax in China?
A: Take your gross net salary and subtract the standard deduction.. After this, you can see which tax bracket your wage falls into, and you can subtract the progressive difference. Multiply this by the rate of the tax bracket and you will arrive at the amount of tax owed.
Alternatively, if you file taxes online, the computer will compute your taxes for you.
For example:
Let's say the gross salary for me is 420,000 RMB. I subtract the standard deduction (420,000-60,000=360,000). This amount falls under the 25% tax bracket (see table above), so after I multiply this amount by 25% I get 90,000 RMB. Then I subtract the Quick Reckon Deduction for that tax bracket, which is 31,920, ending up at a total of 58,080 RMB tax due.
Gross Salary 420,000 RMB
-60,000
= 360,000 x 25% = 90,000
-31,920
= 58,080 RMB total tax due

Q: Is there an online tax calculator I can use?
A: Yes, you can use the free online calculator from the Dezan Shira Associates here (should only be used for reference): 
https://www.dezshira.com/library/investor_tools/individual_income_tax_china

Q: What is the threshold for filing taxes (IIT) in China?
A: The threshold for tax residents having to file taxes in China is 120,000 RMB of income per year. If you are not a tax resident you also do not need to file. 

Q: How do I file taxes (IIT) in China?
A: If you are a tax resident you can e-file or go to the tax office in person. You go in person, the word on the street is that it takes less than 20 minutes to file. You can also e-file, and save yourself a trip outdoors.
​Click here to download the e-filing system for foreigners: https://etax.chinatax.gov.cn/download.html. 
When you file with your passport number, use your latest passport, even if the year you are filing for was before you got your new passport.

Q: Does China tax Taiwan source income?
A: Yes, if you are a China tax resident. If you are a Chinese or Taiwanese national you can offset your mainland China tax paid via the 兩岸條例.
This is because Taiwan (Republic of China) claims the territory of Mainland China and also claims taxes on income received in China. The territory of Taiwan (Republic of China) does not include Hong Kong or Macau. 
 
Q: How do I pay my taxes?
A: You can pay by cash, credit card, ATM, or bank transfer.
 
Q: How do I get my tax refund?
A: You can get your refund by check or direct deposit. The later you send your documents the later you get your refund. 

Q: When will I get my China tax refund?
A: No one can say for sure. This depends on how early you submitted your tax refund, how complicated your refund is, and the arbitrary decision-making of the tax officer assigned to you.
As an example, I personally filed my taxes the first week of May and received my tax refund in July. 
If you really want to know the timing of your tax refund, call the China tax hotline: +866-12366.
Now, stop asking this question in the comments! 
 
Q: What is the withholding tax rate in China?
A: This depends on the nature of the payment and whether or not you stay over 183 days in China (and thus become a tax resident), because there are many different withholding tax rates for different types of payments. In general, please refer to the table above. 

Q: What is the withholding tax rate on dividends for foreigners in China?
A: The withholding rate on dividends sent to overseas investors is 10%.

Q: What is the sales tax/VAT/indirect tax rate in China?
A: In general the VAT rate is 13%.

Q: What is the hotel tax rate in China?
A: 9% VAT.

Looking for a hotel in China? You can search for the best hotel deals in China here.
You can also book Wifi and SIM cards for China on Gigago here.  

Q: What is the corporate income tax rate in China?
A: 25%

Q: How do I file US Taxes if I am an American citizen or a green card holder overseas?
​A: Please see our guide on filing taxes as an American Expat living overseas here.

Q: Who Should I go to if I have a question while filing my income tax return on my own?
A: For specific questions, please call the China tax hotline: +866-12366.

Q: Are there any other tax benefits for foreigners in China?
A: Besides the benefits described above, foreign visitors in China are also applicable for VAT refunds. You can check out many discount deals for accommodation, tours, shopping, and transportation for foreigners in China that include VAT deductions on Klook here or on KKday here. 

Feel free to comment or ask any reasonable general questions below that a free online blog can answer (otherwise, please just call the tax office), and please like and share!
 
-Larry

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