China Individual Tax Update: Good News for Nonresidents

China’s new residency tax rules may cause more business visitors to be treated as a resident.

However, China provided an opportunity for many people to skirt this law.

A non-China-domiciled individual generally will be exempt from Chinese individual income tax (IIT) on foreign-source income that is not paid by a Chinese resident, unless the non-China-domiciled individual has stayed in China for 183 days or more in each calendar year of a six-consecutive-calendar-year period. However, a particular tax filing must be made for this law to apply.

This is surprising as the old rule was 5 years.

The six-year clock starts running again if the non-China-domiciled individual stays outside China for more than 30 days in a single trip in a calendar year in which the individual stays in China for 183 days or more