Frequently Asked Questions
Here is a brief introduction on some of the most common questions we receive about payroll in China related topics. Please do not excitated to contact us for more details.
What kind of foreign individuals shall pay Individual Income Tax (IIT) in China?
(2) Foreign individuals who derive income from personal services provided (including design work, shows, performances, advisory positions, brokerage services, agency services, etc.).
(3) Foreign individuals who derive income from author’s remuneration, royalties, interest, dividends, bonuses, the lease of property, transfer of property, contingent income and income from other sources inside China.
How does a foreign individual perform tax registration?
The following procedures for registration apply and the following documents are required:
1. Copy of one’s passport;
2. Copy of the Employment Contract;
3. Copy of the working permit.
How to determine the income source for incomes other than wages and salaries derived by foreign individuals?
(1) Income from the lease of property to a lessee for use inside China.
(2) Income from the assignment of property such as buildings, land use rights, etc. inside China or the assignment of any other property inside the People’s Republic of China.
(3) Income from any kind of licensing rights for use inside China.
(4) Income from interest, dividends and extra dividends derived from companies, enterprises and other economic organizations or individuals inside China.
How to calculate individual income tax for foreign currency income earned by foreign individuals?
Income in foreign currency shall be converted into RMB according to the exchange rate published by the People’s Bank of China on the last day of the previous month before the tax payment receipt is issued.
Would the wages and salaries paid by enterprises or individuals outside China be regarded as income derived inside China?
In other words, wages and salaries derived by the foreign individual for work while inside China will be considered as China-based income, regardless of whether they are paid by enterprises or individuals inside or outside China. Wages and salaries derived by the foreign individual for work while outside China will be considered as income based outside China, regardless of whether they are paid by enterprises or individuals inside or outside China.
Which types of income derived by foreign individuals can be exempt from IIT?
(1) Foreign individuals are exempted from individual income tax for their income from interest, dividends and bonuses from enterprises with foreign investments in China.
(2) Foreign individual B or H shareholders are exempted from individual income tax on their dividends and bonuses from the share issuing enterprises in China.
(3) Foreign individuals obtaining a housing allowance, meal allowance, relocation and laundry expenses not in the form of cash or on an actual reimbursement basis.