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Dear CBBC,

I’m about to move to China for work. As a foreigner working in the country, what are the personal tax implications?

Foreigners holding China resident permits, including employees of foreign invested enterprises, must generally register with the tax authorities.

Taxable income depends on the individual’s residency status and on the source of income. Full residents are subject to tax on their worldwide income, whereas non-residents (who have stayed in China for less than 90 days of the year) are only subject to income tax on China income paid by Chinese entities.

In between these two scenarios, the calculation may differ, dependent on the length of stay and deemed ties in China. Wage and salary income is subject to a progressive rate system, ranging from five per cent to 45 per cent. The monthly taxable income is calculated after the deduction of a tax free allowance.

Income tax returns must be submitted to the authorities by either the individual or the employer on a monthly basis. Employers are generally expected to withhold employees’ income tax on wage and salary income. Returns and payment to the State Treasury must be completed by the seventh day of the following month. Annual filing may also be required, depending on the individual’s residence duration. Significant penalties are applied for any late tax payment.

Answered by Duncan Levesley, CBBC London. Got a query? Send your questions to enquiries@cbbc.org

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