Recently, the newly revised “Regulations of the P.R.C on the implementation of the individual income tax law” has been confirmed and made public, among which there are clear provisions on the tax of foreigners who do not have a fixed residence in China. The new policy will come into effect on January 1, 2019.
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How to avoid paying
individual income tax in China?
According to article 4 of the new regulation,
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If an individual who has no domicile in China and has resided in China for a total of 183 days for an annual period of not more than six consecutive years, the income derived from outside China and paid by entities or individuals outside China can be exempted from individual income tax.
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If the foreign individual leaves China for more than 30 days consecutive a year, the period of continuous residence of more than 183 days in China will be counted anew.
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How to pay less tax in China?
On December 13, 2018, the “Interim Measures for Special Deduction of Personal Income Tax” was finally confirmed. The new regulations will be also implemented on January 1, 2019. Unlike the “Implementation of the Individual Income Tax Law”, the deduction for individual taxes is mainly for the middle class with wages and salaries as the main source of income.
You can click on the link below to know about the previous draft
New Measures Let You Pay Less Individual Tax In China!
What has changed in the final implementation? Mainly reflected in the following points:
• Children’s education
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It is clarified that the education of children must be full-time education;
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The overseas education section has been added and the requirements for overseas education certification materials have been requested (receipt notices for overseas schools, study visas, etc.);
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• Continuing Education
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Increased degree education, such as on-the-job graduate students;
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The deduction period for continuing education of the same academic qualification (degree) shall not exceed 48 months;
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Continuing education can only be in mainland China;
• Serious illness
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The deduction limit was increased from 60,000 to 80,000;
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To increase the deduction range, the spouse may be deducted in addition to taxpayer, and the medical expenses of the minor children may be deducted by the parent;
• Home loan interest
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Increase the interest deduction for a maximum period of no more than 240 months;
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If you buy a house separately before marriage, you can choose one of them to be 100% deducted by the purchaser after the marriage, or you can deduct the 50% of the deduction standard by the husband and wife respectively.
• Housing rent
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The deduction standard was raised from 800 yuan, 1,000 yuan, and 1,200 yuan to 800 yuan, 1,100 yuan and 1,500 yuan respectively;
At the actual operation level, when the first tax deduction is deducted, the individual needs to fill in the “Special Deduction Information Sheet for Personal Income Tax” and submit it to the employed unit. This table only needs to be submitted once, unless the individual situation changes.
“Special Deduction Information Sheet for Personal Income Tax”
The above table clearly states the relevant information that individual taxpayers need to deduct for the six additional deductions.
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The final draft of the special tax deduction method has increased the deduction limit, expanded the deduction range, made more people benefit, received more tax relief, and the working people benefit the most.
