Income Tax Residency

You are a Tax Resident of PRC if either of the following criteria is satisfied:

  1. Individuals who domicile in P.R.China
  2. Individuals who are physically present in P.R.China for aggregated 183 days or more in any given 12 months period (commencing or ending in the fiscal year concerned).

If employees are deemed to be tax residents, they will be liable to pay individual income tax.

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And the non-resident company that performs the service is considered to have a permanent establishment in China.

Income attributed to the business operation is taxable locally.

Chinese Tax Loss

Tax losses can be used to offset income earned in subsequent years.

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In the absence of any income, the losses cannot be utilized. And the tax losses can only be carried forward for 5 years.

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Chinese Tax deduction on expenses 

Under PRC individual income tax law, there are tax exemptions (or deductions) on benefits such as international school fees and housing allowance, provided that these items are included in the employment contract.

Make sure to obtain the fapiao (tax invoice) from the landlord and the school as the Tax Bureau will require the applicant to present a copy of the employment contract as well as fapiaos.