Taxation of international executives
In China, the scope of taxation for individuals is generally determined by two factors:
An individual who is domiciled in China is liable to income tax on worldwide income. This means that regardless of where the income is sourced or received, this income is subject to tax in China.
A non-domicile of China is taxed in accordance with length of residence. A non-domicile who resides in China for no more than 6 consecutive years with put-on-record filing completed is taxed on income derived within China. A non-domicile who resides in China for more than 6 full consecutive years (long-term resident) may be taxed on worldwide income.
If a non-domicile is present in China for 90 days or less during a year, the compensation received for performance of services in China is not subject to tax if the economic employer of the individual is not a Chinese entity during their assignment in China and the costs of such employment are not borne by an entity within China. Where a tax treaty is applicable, a non-domicile may be exempt from tax in China for income earned during periods of up to 183 days in China during a taxable year, or a 12-month period, provided certain requirements are met.
The income tax rates on employment income range from 3 percent to 45 percent. Investment income and capital gains are generally taxed at a flat rate of 20 percent unless otherwise indicated.
The official currency of China is the China Yuan Renminbi (RMB).
Herein, the host country/jurisdiction refers to the country/jurisdiction to which the employee is assigned. The home country/jurisdiction refers to the country/jurisdiction where the assignee lives when they’re not on assignment.
All information contained in this publication is summarized by KPMG Advisory (China) Limited, the China member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on the PRC Individual Income Tax Law (Presidential Decree No. 9) and implementation regulations (State Council Order No. 707); the website of the PRC tax authorities; the website of the PRC social security authorities.
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