FAQs on individual income tax

Which foreign experts’wages and salaries are exempt from individual income tax?

1) Foreign experts sent directly to China by the World Bank according to the World Bank special loan agreement;

2) Experts directly sent by the United Nations organizations to work in China;

3) Experts working in China for United Nations assistance programs:

4) Experts sent by a donor country to China to work specifically on grant programs;

5) Cultural and educational experts who work in China for less than two years under cultural exchange programs signed by the two governments and receive wages or salaries from their countries;

6) Cultural and educational experts who work in China for less than two years under the international exchange program of Chinese universities and colleges and receive wages or salaries from their countries;

7) Experts who work in China through non-governmental scientific research agreements and receive wages and salaries from their countries’ governmental agencies.

What are the specific provisions on paying individual income tax for foreign individuals in senior management positions in China?

Foreign individuals who occupy senior management positions in China are those who hold positions as chiefs and deputy managers, chief executives, directors and other types of management positions in Chinese enterprises.

Foreign individuals who hold directorships or senior management positions in Chinese domestic enterprises and get director’s fees and salaries from those enterprises must declare and pay personal income tax from the date of taking office till leaving office, whether they perform their duties in China or not.

Foreign individuals who hold director positions and gets director’s fees must pay personal income tax on the basis of remuneration for personal services. Wages for management positions unrelated to their director positions shall attract personal income tax based on salaries and wages. Foreign enterprises’ directors who hold direct managerial positions or who nominally do not hold direct managerial positions in enterprises, but are actually engaged in daily management work shall add up their director’s fees, supervisor’s fees and personal salary and pay personal income tax on the income from wages and salaries.

Individuals from Hong Kong, Macao and Taiwan who take senior managerial positions in Chinese mainland’s enterprises shall pay personal income tax in accordance with the above provisions.

What are the specific provisions on personal income tax for foreign individuals working in representative offices in China?

Where a representative office in China uses the method of approved profits to calculate and pay enterprise income tax or does not pay enterprise income tax for no business income, the wages and salaries actually obtained by the employees while working within the territory of China, whether recorded in the accounting books of the institution, shall be deemed to be paid or borne by the representative office of the foreign enterprise in China.

The salary income of foreign news agency reporters in China shall be levied in accordance with the provisions of the personal income tax law of China. In accordance with the principle of reciprocity, if a foreign reporter’s country stipulates that the personal income tax of our correspondents shall be exempted, we shall also exempt the foreign reporter’s personal income tax, while it must be handled through diplomatic channels.