Check out Your Individual Income Tax Status in China!

On 20^th of August, 2019, the National Development and Reform Commission (NDRC) promulgated the Circular about Strengthening Construction of Credit Database for Individual Income Taxpayers.

The highlights of the Circular include:

1. Establish an individual income tax credit management mechanism and implement the credit commitment system.

2. Establish and improve the income tax credit records, collect and evaluate tax and credit information according to the law.

3. Taxpayer shall be responsible for the authenticity and accuracy of their income and tax information.

4. Establish an identification mechanism of natural person’s  fraudulent activities, particular attention to will be paid to violation of relevant laws and regulations, tax evasion, tax fraud and other  fraudulent activities. Serious cases will be made public according to law, and related information will be transferred to the national credit information sharing platform, and their credit data will be updated from time to time. 

5. Individual income taxpayers with serious dishonest behaviors would be subject to joint punishment. Tax agency and relevant departments will work together to roll out joint punishment measures against taxpayers who make dishonest or false tax declarations, special additional tax deductions and tax privileges.

All expats working or doing business in China must be careful with your tax issues now, ask yourselves the following questions or check with your accountant or tax attorney about your tax status in China:

1.Am I a tax payer?

Expats who have resided in China for 183 days or more cumulatively within a tax year, shall be deemed as resident individuals, all income from China and overseas shall be subject to individual income tax.

For expats who have resided in China for less than 183 days cumulatively within a tax year, shall be deemed as non-resident individuals, only income from China shall be subject to individual income tax.

2. What are taxable income?

According to the updated IIT law, the following categories are all taxable income:

1. Comprehensive income, including: wages and salaries, remuneration for personal services, revenue for manuscripts and Royalties;

2. Business operation income;

3. Interest, dividends and bonuses;

4. Income from lease of property;

5. Income from transfer of property;

6. Contingent income

Also, please remember as long as the income is from China, even the location of payment is outside of China, the income is subject to China IIT law.

Related link:

State Taxation Administration