Tips on 2020 China IIT for Foreign Individuals Tax Optimization  2020年外籍人士中国个人所得税优化实务

The taxpayers of individual income tax (IIT) in China are individuals (including Chinese citizens, foreigners) who live and obtain income in China, as well as those individuals who do not live in China but obtain income from China.

How should foreign individuals pay IIT in China after the implementation of the new IIT Law effective on January 1, 2019? Here is all you need to know for year-end of 2020 especially if you have more than one source of income:

List of whether income is taxable on foreigners without domicile in China

Data from: chinaacc

The types of income includes salaries, labor services remuneration, authors remuneration, royalties, operating income, interest, dividends, bonuses, property leasing& transfer income, incidental income etc.

Collection of IIT can be on monthly basis or annual basis. For Income from production and business operations of privately or individually-owned business, Income from contracted or leased operation of enterprises and institutions, wages and salaries in specific industries, and income obtained from outside China, the IIT shall be collected on annual basis, and other types of IIT shall be collected on monthly basis.

Calculation method for taxable income for IIT declaration on Monthly basis:

Taxable income = monthly income – 5,000 (exemption) - special deduction (such as three types of social insurances and one fund, etc.) - special additional deductions - other deductions determined by law

Among them, special additional deductions are also called “itemized deductions”, which includes six items: children's education expenses, continuing education expenses, medical expenses for serious illness, interest expenses for mortgages, housing rental expenses, and expenditures on support the elderly dependents.

Foreign individuals shall enjoy relevant policies according to their status under the IIT law of China. Under the new IIT Law, individuals who have domicile in China or who have no domicile but have resided in China for 183 days or more within a calendar year are considered as China tax residents. The rests are considered as non-resident individuals.

Foreign non-resident individuals are not qualified for taking advantage of the special additional deduction policies, but the specific subsidy tax-exemption policies are applicable for them. Foreign individuals who are tax residents can choose to enjoy the special additional deduction policies from January 1, 2019 to December 31, 2021 or take advantages of the subsidy tax-exemption policies of housing subsidies, language training fees, children's education fees, etc. According to the information available to us, as of 2022, the policy of special additional deductions shall also be available for foreign non-resident individuals.

Source: GOVT.Chinadaily

From Janury 1, 2019, an individual who resides in China for 183-days or more will be considered a tax resident and be liable to PRC IIT on their global income. While it is easier to become a Chinese tax resident under the new IIT rules, an expatriate working in China can still reduce their Chinese IIT liability by traveling outside China for more than 30 consecutive days in one calendar year every six years as it's not clearly stated that the previous five-year exemption enjoyed by foreigners will not exist under the new IIT law.

Preferential policies on the IIT related to financial market

In addition, in order to support the development of the financial capital market, China has issued many preferential policies on the IIT related to the financial market, including policies especially to foreign individuals:

1. The income from dividends that obtained by foreign individuals from foreign-invested enterprises shall be exempted from IIT;

2. The income obtained from the investment of overseas foreign individual investors in China's domestic oil futures is temporarily exempted from IIT for three years.

In December 2019, the State Administration of Taxation issued an announcement to further clarify the relevant provisions on the annual final settlement of IIT. Tax residents may be exempted from the final settlement and payment of IIT for their comprehensive income obtained from January 1, 2019 to December 31, 2020 if the annual comprehensive income does not exceed 120,000 RMB, or the amount of additional tax payable at the final settlement does not exceed 400 RMB.

It is worth noting that, only tax residents need to handle the annual final settlement. Second, according to the new IIT, the annual final settlement only include four types of income such as the wages/salaries, labor service remuneration, authors’ remuneration and royalties into the comprehensive income scope and exclude interests, dividends, bonuses, property leasing & transfer income and incidental income.

The calculation method of final settlement:

Balance of tax refundable or payable at annual final settlement= [(comprehensive income – 60,000 - special deduction - special additional deduction - other deductions determined by law) × applicable tax rate - quick calculation deduction] - prepaid tax amount

IIT Rate Table (applicable to comprehensive income)

Date from: www.chinatax.gov.cn

The time for individual taxpayers to handle the annual final settlement is from March 1 to June 30 of the following year. Taxpayers without domicile in China who will leave the country before March 1 may handle it before departure.

How to deal with the annual tax final settlement?

Taxpayers can choose the following ways to deal with their annual settlement: oneself, the company you serve or a tax agency. Most Income received from sources other than wages and salaries are required to be declared at the local tax bureau and can not be declared online. A tax agency would be very helpful in this case.

Through annual final settlement of IIT, one can more accurately calculate their payable or refundable IIT based on the taxpayer's comprehensive income in the whole year, and take the advantages of various pre-tax deduction and tax preferential policies, thus better protect the rights and interests as taxpayers.

In the case that the amount of advanced payment is higher than the tax payable as a result of final settlement, the tax authorities will process the tax refund after the examination and verification in accordance with the relevant regulations. The taxpayer shall provide the qualified bank account opened in China when applying for the annual final tax refund. And the refund will be automatically deposited to the back account.

In China, 2020 is the first year that the regulation on IIT settlement was formally implemented. Our professional team have handled a large number of successful cases for foreign individuals with multi-source of income. For further consultation and service, please contact us by scanning the code.

   2020年外籍人士中国个人所得税优化实务

中国的个人所得税的纳税义务人是在中国境内居住有所得的人，以及不在中国境内居住而从中国境内取得所得的个人，包括中国国内公民，在华取得所得的外籍人员和港澳台同胞。

新税法于2019年1月1日实施后，外籍人士在中国境内如何缴纳个人所得税? 以下是2020年底你需要知道的，特别是当你有一种以上的收入来源:

在中国无住所的境外人士是否征收个人所得税一览表

来源：chinaacc

个税的征税内容包括工资、薪金，劳务报酬，稿酬，特许权使用费，经营所得，利息、股息、红利所得，财产租赁和转让，偶然所得及其他。

个税的征收方式可分为按月计征和按年计征。个体工商户的生产、经营所得，对企业事业单位的承包经营、承租经营所得，特定行业的工资、薪金所得，从中国境外取得的所得，实行按年计征应纳税额，其他所得应纳税额实行按月计征。

计算方法：

应纳税所得额=月度收入-5000（免征额）-专项扣除（三险一金=养老保险+医疗保险+失业保险+住房公积金等）-专项附加扣除-依法确定的其他扣除

其中，专项附加扣除又称“分项扣除”，包括子女教育费、继续教育费、重大疾病医疗费、抵押贷款利息支出、房屋租赁费、赡养老人支出等六项。外籍个人根据其在中国个税税法下的身份享受相关政策，外籍个人在个税法下的身份分为两种：居民个人和非居民个人，在中国境内有住所或没有住所但在一年内累计居住满183天属于居民个人，其余属于非居民个人。外籍个人属于非居民个人的不能享受专项附加扣除的政策，但适用八项补贴免税政策；

外籍个人属于居民个人的，在2019年1月1日至2021年12月31日期间可以选择享受专项附加扣除政策，或者选择享受住房补贴、语言训练费、子女教育费等补贴免税政策。但不得同时享受。根据我们现在所能了解到的信息，从2022年起外籍个人享受专项附加扣除的政策会统一，到时就不会有上述的区别。

自2019年1月1日起，在中国居住满183天的个人将被视为税务居民，并对其全球收入承担中国个人所得税。新个税法规则下,外籍人士更容易成为中国税收居民，然而在中国工作的外籍人士仍然可以每6年通过任一年度中有一次离境超过30天在中国境外旅行来减少他们在中国的个人所得税。

另外，为支持金融资本市场的发展，中国针对金融市场的涉及到的个人所得税，给予了很多优惠政策，其中包括针对外籍人员的：

1.     外籍人员从外商投资企业取得的股息红利所得免征；

2.     境外个人投资者投资中国境内原油期货取得的所得三年内暂免征。

2019年12月，中国国家税务总局发布公告，进一步明确关于个人所得税年度汇算清缴的相关规定，2019年1月1日至2020年12月31日居民个人取得的综合所得，年度综合所得收入不超过12万元且需要汇算清缴补税的，或者年度汇算清缴补税金额不超过400元的，居民个人可免于办理个人所得税综合所得汇算清缴。

值得注意的是，一、只有居民个人，才需要办理年度汇算，非居民个人不需要办理年度汇算；二、年度汇算的范围和内容，仅指此次个人所得税改革纳入综合所得范围的工资薪金、劳务报酬、稿酬、特许权使用费等四项所得，不包括利息、股息、红利所得，财产租赁和转让，偶然所得。

汇算清缴的具体计算公式：

年度汇算应退或应补税额=[（综合所得收入额-60000-专项扣除）×适用税率-速算扣除数]-已预缴税额

个人所得税税率表

（综合所得适用）

纳税人办理年度汇算的时间为次年的3月1日至6月30日，在中国境内无住所的纳税人在3月1日前离境的，可以在离境前办理年度汇算。

在办理方式方面，纳税人可以自主选择以下方式：　　

1、自己。税务机关将通过个人所得税手机APP、网页端、12366自然人专线等渠道提供涉税咨询，解决办理年度汇算中的疑难问题，帮助纳税人顺利完成年度汇算。

2、所在公司。

3、税务代理机构。即可以委托涉税专业服务机构或其他单位及个人代办。

通过年度所得税汇算清缴，可以根据纳税人全年的综合收入，更准确地计算其应交所得税和应退所得税，并充分利用各项税前扣除和税收优惠政策，更好地保护纳税人的权益。

经清缴后，预付金额高于应纳税额的，税务机关按照有关规定审核后办理退税。纳税人申请年度最终退税时，应提供其在中国境内开立的符合条件的银行账户。退款将自动存入该账户。

在中国，2020年是《个人所得税汇算清缴条例》正式实施的第一年。我们的专业团队为多收入来源的外籍人士办理了大量成功案例。如需进一步咨询和服务，请扫码与我们联系。