Updated November 2026
Most foreigners arrive in China with two questions. From what date do I owe Chinese tax, and on what money? Both turn on words that look technical and are not. One is domicile. The other is a count of days. Get either wrong and you overpay for years, or you find a liability after you leave.
1. The short answer
China treats you as a tax resident in two situations. You are domiciled here, or you spend 183 days or more here in a calendar year. Residents pay Chinese tax on worldwide income. Non-residents pay only on income sourced in China, and only on the part tied to work performed here.
China taxes wages from 3 to 45 per cent on an annual basis. The starting point is a 60,000 yuan standard deduction, plus whatever deductions you can support. That last phrase carries most of the work, and it has its own guide.
| Test | What it decides |
|---|---|
| Domicile in China | Resident from day one, whatever the day count says |
| 183 days in the calendar year | Resident for that year, worldwide income included |
| Six consecutive resident years | Overseas income stops being exempt from year seven |
| 90 days or less, or a treaty period | Wages paid abroad may escape Chinese tax entirely |
Three timing rules decide the hard cases: how a day counts, when the six-year clock bites, and when a short stay escapes tax. Sections 3 to 5 take them in order. Everything after that is arithmetic.
2. Two tests, not one
Article 1 of the Individual Income Tax Law sets two routes into residence. The first is domicile. The second is physical presence for 183 days in a tax year. They are alternatives, so passing either one is enough.
Domicile: the test nobody checks
Domicile does not mean nationality, and it does not mean your visa. It means habitual residence. Inspectors read it from your household registration, your family’s location, your property and your economic interests.
Consider a foreign national with twelve years in Shanghai, a flat and children at a local school. That person can be domiciled without anyone counting a single day. The 183-day test never enters the analysis.
The calendar year, not your contract
For everyone else, the count decides. Start on 1 January, not on your arrival date. China’s tax year is the calendar year, so the count resets mid-contract, mid-school-year and mid-project.
Land in August and leave the following July. You can be a non-resident in both calendar years while spending eleven months on the ground. Nobody plans a contract that way on purpose, and plenty of people sign one.
Two documents do not settle the question. A work permit and a residence permit are immigration permissions. They tell you whether you may stay, not whether China may tax you. Expect to prove the day count yourself, from exit and entry records.
Where a person is resident in two countries at once, a treaty decides. The tie-breaker runs through permanent home, centre of vital interests, habitual abode and nationality, in that order. Mutual agreement between the two administrations comes last. China has treaties with more than 110 jurisdictions, and the tie-breaker can move you out of Chinese residence even after 183 days.
3. Counting days: the 24-hour rule
The 2019 announcement on counting residence days settles arithmetic that used to be argued case by case. Days count by physical presence. The day you enter China counts in full, and so does the day you leave. Two crossings on the same day count as one. A stay of under 24 hours counts as nothing.
Read those rules together and the result surprises people. Land Monday at 9am and fly out Friday at 6pm, and you have spent five days here, not four. Take an early train into Shenzhen and return before midnight, and you have spent none.
The 24-hour carve-out is not a technicality. It keeps cross-border commuters, installation engineers and visiting directors out of the resident category.
It is also the first thing an inspector reconstructs. The exit and entry administration holds a record of every crossing, down to the minute. If your diary disagrees with that record, the record wins.
So keep a log while it is cheap. Dates in, dates out, purpose, and the days you never left the airport. Rebuilding a year of travel from boarding passes at the end of an audit is the expensive way to answer a question that takes ten minutes a month.
4. The six-year rule
183 days makes you a resident for that year. Staying resident long enough changes what you are taxed on, and that is where planning starts.
The rule accumulates. Stay resident for six consecutive years, each with 183 days or more, and from the seventh year China taxes your worldwide income. The overseas part stops being exempt. Any single year below 183 days resets the clock. So does one trip outside China longer than 30 consecutive days.
During the first six years, overseas income may escape Chinese tax. Two conditions apply. An overseas employer must pay it, and no Chinese entity may bear the cost. You make the claim in the annual filing, with payroll evidence showing who paid and who carried the cost. A secondment letter that quietly recharges your salary to the Shanghai subsidiary destroys the claim.
A sequence makes the stakes visible. Arrive in March 2019 and stay resident every year. 2019 to 2024 are the six, and 2025 is the year worldwide income becomes fully taxable. Insert one year at 150 days, or one four-month posting to Singapore, and the six restart.
Many executives who arrived before 2020 had that break handed to them by the pandemic. Few planned for it, and fewer kept records proving it.
Two details matter. The 30-day test measures each trip separately, so a series of two-week holidays does nothing. And the count runs on calendar years, so a half-year arrival can still reach 183 days and start the sequence earlier than you expect.
5. Short stays: the 90-day rule and its treaty twin
Below the residence threshold sits a second exemption, the one short-term visitors actually use. Spend no more than 90 days in China in a tax year, and wages for work here escape Chinese tax. Two conditions again: an overseas employer pays them, and no Chinese establishment carries the cost.
A treaty usually widens the window. Most Chinese treaties replace 90 days with 183 days in any twelve-month period. They add a condition that the employer has no permanent establishment in China. The window rolls, so it differs from the calendar-year count used for residence. Mixing the two is a common and expensive error.
The exemption is narrow in one direction and generous in another. It never covers salary paid by the Chinese entity, and it never covers fees borne by a Chinese branch. But it can remove the Chinese charge outright for board members, commissioning engineers, auditors on a three-week review and trainers on a short programme. Only the home-country position remains.
Non-residents also face a different computation. The employer taxes their wages month by month against a monthly table, with a 5,000 yuan deduction and no special additional deductions. The mechanism, and the election to be treated as a resident for the whole year, sits in the guide to non-resident treatment.
6. What is taxed: nine categories, three baskets
The law lists nine categories of income. Wages and salaries. Remuneration for personal services. Author’s remuneration. Royalties. Business income. Interest, dividends and bonuses. Rental income. Gains on transferring property. Incidental income. Every taxable receipt lands in one of them, and the category fixes the rate, the deduction and the filing duty.
Three baskets do the real work. The first four categories form comprehensive income, which China pools annually and taxes from 3 to 45 per cent. Business income of an individual household or a sole proprietor runs from 5 to 35 per cent. Everything else bears a flat 20 per cent, usually at the moment of payment.
Where the work happens decides sourcing, not who signs the cheque. Salary for days worked in China counts as China-sourced even when a foreign parent pays it into a foreign account. You apportion equity vesting by working days in China across the vesting period. That is how a grant made in California produces a Chinese taxable event years later.
What you may subtract before the rate applies is a separate subject, and a large one. The deductions and allowances guide covers the seven special additional deductions, the foreign-national allowance election, private pensions and treaty relief. This article stays on the rate itself.
7. How much: the annual table and two calculations
Comprehensive income uses an annual scale. Total taxable income for the year sets the bracket, after the 60,000 yuan standard deduction, social insurance and any deductions you claim.
| Annual taxable income (RMB) | Rate | Quick deduction |
|---|---|---|
| Up to 36,000 | 3% | 0 |
| 36,000 – 144,000 | 10% | 2,520 |
| 144,000 – 300,000 | 20% | 16,920 |
| 300,000 – 420,000 | 25% | 31,920 |
| 420,000 – 660,000 | 30% | 52,920 |
| 660,000 – 960,000 | 35% | 85,920 |
| Above 960,000 | 45% | 181,920 |
Take a resident with 600,000 yuan of taxable income. The bracket is 30 per cent. Tax is 600,000 multiplied by 30 per cent, less 52,920: 127,080 yuan. The marginal rate is 30 per cent, while the effective rate on the whole sum is 21.2 per cent. Clients quote the first number and budget against the second.
Now a non-resident who spends 120 days here, paid 60,000 yuan a month by the Shanghai entity. The monthly table applies, with a 5,000 yuan deduction. That gives 55,000 multiplied by 30 per cent, less 4,410: 12,090 yuan a month. Over four months, 48,360 yuan. No annual deduction, no special additional deductions, no reconciliation.
During the year your employer withholds on a cumulative basis and recalculates the year to date each month. December’s payslip is therefore not December’s salary times a rate. You settle the final number at the annual reconciliation.
8. Annual bonus: how the separate calculation works
China may tax one annual one-off payment separately from salary. The method is mechanical. Divide the bonus by twelve to find the bracket. Apply that rate to the whole bonus. Subtract the monthly quick deduction.
A 360,000 yuan bonus divides to 30,000, which sits in the 25 per cent bracket with a 2,660 deduction. Tax is 360,000 times 25 per cent, less 2,660: 87,340 yuan. The effective rate is 24.3 per cent. Fold the same bonus into ordinary income and the top slice would bear 45 per cent.
The method has a cliff. The rate steps up on the whole amount, not on the excess, so one yuan more can cost thousands. At 36,000 the rate is 3 per cent. At 36,001 it becomes 10 per cent on the full figure. Bonus schemes built on round numbers lose money at the margin, and splitting two payments across two tax years is often the cheapest fix.
The separate method runs until 31 December 2027, extended from an earlier sunset. Which route costs less depends on your deductions and your other income. That comparison belongs with the planning in the deductions guide.
9. What this article leaves out
Three subjects sit next to this one, and I keep them apart so that none repeats the others. Deductions, allowances and the choice between methods are in the deductions guide. Deadlines, withholding, annual reconciliation, exit clearance and penalties are in the payment timing guide.
Two narrower questions come up often. Sending salary out of China raises its own banking and documentation issues, covered in remitting salary home. If you work in the Greater Bay Area, the subsidy that tops up the gap between mainland and Hong Kong rates changes the arithmetic in section 7, as set out in the GBA incentive note.
For the primary texts, the State Taxation Administration publishes guidance in English at its English portal, and the regulation database at fgk.chinatax.gov.cn carries the underlying rules. Neither replaces the Chinese text where the two differ.
Before you rely on any of this, assemble four documents: the exit and entry record for the year, the payroll breakdown showing who paid and who carried the cost, any equity grants, and the treaty text between China and your home country. Those four answer most residency questions before a lawyer is needed.
Residence is a fact you can measure. The rate is arithmetic. The disputes that cost money are almost always about evidence, and evidence is cheapest to collect on the day.
Frequently asked questions
Yes. Domicile is a separate route. If your household, family, property and economic interests sit in China, the tax authority can treat you as domiciled and tax you on worldwide income from the day you arrive back, whatever the day count shows.
No. The count runs on the calendar year and follows presence days. Entry and departure days each count in full, and a stay of under 24 hours counts as zero. Somebody who arrives in August and leaves the next July can stay a non-resident in both calendar years.
No. A work permit and a residence permit are immigration documents. Tax residence turns on domicile or 183 days of presence. Expect to prove the day count from exit and entry records, because the tax bureau can obtain the same data.
Only if you are resident. Non-residents pay on China-sourced income, and salary for work performed here counts as China-sourced wherever it is paid. In the first six resident years, overseas income paid by an overseas employer and not borne by a Chinese entity can be exempt, but you must claim it in the annual filing.
Two things. A year in which you spend fewer than 183 days in China, or a single trip abroad longer than 30 consecutive days. Short holidays do nothing, because the test looks at each trip separately. Once broken, the six years restart from zero.
The monthly table, from 3 to 45 per cent, with a 5,000 yuan monthly deduction and no special additional deductions. A non-resident cannot use the annual 60,000 yuan deduction, unless they elect resident treatment for the whole year in the limited cases where that is allowed.
Foreign nationals may choose between the eight non-taxable allowances, which cover housing, language training and children’s education among others, and the special additional deductions. The choice is made annually and runs to 31 December 2027. Model both, because the better answer depends on your family situation.
Divide the bonus by twelve to find the bracket in the monthly table, apply that rate to the whole bonus, then subtract the quick deduction. One payment a year qualifies, through 31 December 2027. Merging the bonus into salary sometimes costs less, and the comparison is in the deductions guide.
Disclaimer: This article is general information about PRC law, not legal advice, and no attorney–client relationship is created by reading it. PRC law and local practice change frequently — confirm before relying on this content. © 2026 Chibridge Law Firm / China Law Help.
