The “Five Year Tax Rule” for Expatriates in China

images

 

If you are living and working in China for over 4 years already, you’d better document yourself about the “Five Year Tax Rule” if you don’t want to become taxable on your worldwide income! 

 

The Five years rule applies to any expatriate who is a tax resident in China for a consecutive five civil years (January 1 to December 31).

After Five years, the expatriate will be taxed on the worldwide income UNLESS he/she takes relevant actions to avoid it and this is how you should proceed! 

  1. Before the end of the 5th year: the expatriate could reset the clock for the Five Years Tax Rule if he/she is not in China for whatever reason (business trip, vacation…) for:
    1. for a total of more than 90 days in multiple trips (each time excluding departure and arrival day).
    2.  for more than 30 days on a row (doesn’t not include departure day and arrival day, so it’s a single trip of 30 days + 2).

      China-5-Year-Rule

  2. From the 6th year: from the 6th year, the expatriate becomes liable on all his/her income globally UNLESS he/she resides in China for less than 90 days in a tax year or civil year OR he/;she becomes tax resident in another country which has double tax treaty with China.

 

If you couldn’t break the rule, you will become an Individual taxpayers with foreign-sourced income and you must file IIT self-declaration returns + pay tax due if any of the following circumstances apply.

 

As we don’t have all answers to questions that may arise after you read this brief introduction to the Five Years tax Rule, I suggest you contact one of the advisory firm listed below to expose your personal situation and get personalized advice on how to navigate the five years tax rule in China!

 

 

 

 

Sources

Related Posts:

About Marketing

I am living in China since 2009 and in Beijing since 2011. I am sharing my experiences for other expatriates to make their stay in Beijing more enjoyable. As I am writing this blog for SCOUT Real Estate agency, I am also computing updates about the Real Estate market in Beijing, not only on residential properties, but as well on commercial locals and offices. Hope you enjoy your reading!