The calculation of quick deduction: the amount of quick deduction applicable to the relevant grade = the maximum amount of income of the previous grade × (tax rate of the previous grade – tax rate of the previous grade) + quick deduction applicable to the previous grade

Avoidance of Double Taxation

For cross-border working foreign individual (including individuals from Hong Kong, Macau, and Taiwan), whose country has signed double taxation agreement with the PRC Government, individual income tax will not be levied by the PRC Government in the following situations:

• Be employed by companies outside China;

• The accumulated duration of residence does not exceed 183 days (from 1 January to 31 December each year) in a year;

• The salaries, which is not borne by enterprises within the territory, be paid by companies abroad.

Table on charges of individual income tax on income earned by foreigners within China

Note:
Residence duration in China: 183 days for residents from countries which have signed tax treaties with China while 90 days for residents from countries which have not signed.
Senior Executives: general managers, deputy general managers, directors, chief engineers, chief accountants and other similar executives of a company.
1 Year: residence within Chinese territory for 365 days in a tax year; any temporary absences from China (less than 30 days during a trip or cumulatively less than 90 days over numerous trips) within a tax year causing no deduction of the period of stay.

The Scope of the Charge for Individual Income Tax

• Income from wages and salaries;

• Income of individual industrial and commercial operators from production or business operation

• Income from business operations contracted or leased from enterprises or other undertakings;

• Income from labor service;

• Income from remunerations to authors;

• Income from royalties;

• Income from interests, dividends and bonuses;

• Income from the leasing of property;

• Income from transfer of property;

• Accidental income;

• Other types of income specified as taxable by the financial departments under the State Council.

Exemptions for Individual Income Tax

• Awards for outstanding performances in science, education, technology, culture, public health, sports, environmental protection and other fields granted by provincial people’s governments, ministries and commissions of the level of a ministry under the State Council and units at or higher than an army of the Chinese People’s Liberation Army, and organisations of foreign countries and international organisations;

• Interests on government bonds and financial debentures issued by the State;

• Allowances and subsidies issued by uniform standards formulated by the State;

• Welfare benefits, pensions for the disabled and survivors and relief payments;

• Insurance indemnities;

• Decommission and demobilisation pay to officers and soldiers;

• Settlement pay, severance pay, and pensions to staff members and workers and pensions and subsidies to veteran cadres issued by uniform standards formulated by the State;

• Income of foreign diplomats, consulate officials and other officials of foreign embassies and consulates in China free from individual income tax in accordance with the provisions of the relevant laws of China;

• Dividends and bonuses income of a foreign individual obtained from foreign investment enterprises free from individual income tax;

• Income free from individual income tax in accordance with the provisions of the international conventions and agreements the Chinese government has participated in or signed;

• Other income exempted from individual income tax with the approval of the departments of finance under the State Council.

Deductions or Exemptions for Individual Income Tax are Entitled to under Following Cases

• income of the disabled, aged widows and widowers and dependents of fallen heroes;

• Heavy losses resulting from natural calamities;

• Tax reductions with approval by the departments of finance under the State Council.