Generous Tax Exemptions for Foreigners and Non-mainland Citizens

Monday, 18 March 2019 13:51

China Ministry of Finance (“MOF”) and State Taxation Administration (“STA”) recently jointly issue the announcement as “MOF SAT Announcement 2019 No.34” and “MOF SAT Announcement 2019 No.35” which announced specific rules concerning tax exemption to reduce the amount of individual income tax (IIT) paid on incomes earned overseas. The announcements mark more generous tax exemptions on overseas-sourced incomes of foreigners and non-mainland citizens working in the mainland.


According to these new announcements, individuals who have lived on the Chinese mainland for six consecutive years and have stayed there for 183 days or more each year will need to pay IIT on their overseas-sourced incomes. Otherwise, their incomes earned overseas will be IIT exempt. Previously, the exemption was for tax residents who have lived on the mainland for less than five years.


The clock for the six-year period will be reset if the individual leaves the mainland for more than 30 consecutive days in a year.


A stay of less than 24 hours on the mainland will not be counted as a day and the count started from Jan 1, 2019.


The rules take into effect on Jan 1, 2019.


“MOF SAT Announcement 2019 No.35” provides detailed legal reference of the different “source of income” (e.g. salary/bonus and equity incentive/senior management/remuneration as the author) for foreigners and non-mainland citizens.


“MOF SAT Announcement 2019 No.35” further makes it in detail how to calculate salary and individual income tax for the person without domicile, its application for the Double Taxation Agreement.


If you are interested in the detailed of these announcements (in Chinese only), please refer to the below links.

  • “MOF SAT Announcement 2019 No.34”


  • “MOF SAT Announcement 2019 No.35”


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Mr. Mike Chang

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