5 Things ALL Expats Should Know About China’s New Annual Tax Return

china annual tax return

Table of Contents

What is the China annual tax return?

On January 1st 2019 China implemented the annual tax return for individuals to submit. Residents of China (foreign residents included) must submit an annual tax filing between March 1st and June 30th following the end of the tax year, after Chinese New Year. 

The application involves calculating income, remunerations and royalties obtained and then deducting the tax paid in advance, calculating the refundable or supplementary tax payable, reporting to the tax authorities and making tax settlements.

When can I have to file my annual tax return?
Do I have to file my annual tax return?
Will I have to pay a lot of taxes?
How do I file and submit my annual tax return?

 

When can I file for annual tax return?

You can file for the annual tax return between March 1st and June 30th after Chinese New Year. The government may however ask you to file earlier depending on your employer, but the official deadline is June 30th.

Do I have to file my annual tax return?

Yes. Unless you fit one of the following conditions:

  1. You are not a resident and you have resided in China for less than 183 days
  2. You are a resident, but your annual income does not exceed 120,000 CNY (10,000 CNY/Month)

Failure to submit your annual tax return may land you a fine of varying severity based on taxes withheld and it may be recorded in your personal tax credit file. On the other hand, submitting your annual tax return puts you at good standing with the government which is always a plus when dealing with immigration.

Will I have to pay a lot of tax?

Good news. The short answer is (in most cases) NO… 

China’s overseas income tax is among the lowest in the world and your local employer (if you have one) has been deducting your income tax all along. In some cases, you may even be owed tax money in the form of a pay-back.

Although the annual tax return re-structure was designed for local businessmen, many foreign investors have also found it beneficial. The policy has attracted thousands of foreign residents to China to take advantage of its low overseas income tax rate.

China tax returns are mostly free in the following three categories: 

  1. Income from capital gains
  2. Income from abroad
  3. Property tax

It should be noted that the annual tax-free allowance on income from capital gains is only available to the first 90 days of working in China. After that period, foreigners have to pay the applicable income tax rate.

Income from abroad and property tax are not taxed in China. However, they may be required to pay certain taxes depending on their personal situation.

A person who has lived in China for five years or more and a permanent resident can file his/her annual tax return regardless of the country he/she resides in. 

A non-residential individual can also file tax returns to the Chinese government irrespective of his country of residence. For this, he needs to obtain an EAC or tax identification card from the tax office in his home country. He also needs to pay the prescribed administrative fee.

The tax return is one of the most important documents for China residents planning to immigrate to China or live in China. Thus, it is a prerequisite for all foreign residents who want to live in China.

How do I file and submit my annual tax return?

The China annual tax return can be filed and submitted online or offline. You file online via a government app or file offline by visiting your local China tax office. Each method has their own disadvantages. The online application is extremely complex even for a local to navigate, and you guessed it, no English. The offline option is clunky and time consuming by design.

Filing online involves several steps and costs. In addition to uploading the income and expenses details, applicants need to pay certain administrative fees and other registration fees. 

How to file your annual tax return the EASY way…!

Why risk doing it wrong and spend valuable hours of your time breaking your head over the annual tax return filing when you can simply send us a filing request HERE 

We’ll get back to you with an all-english application form for you to fill in.

  1. You fill in your income and revenues
  2. We prepare the tax calculations
  3. You confirm the taxes due
  4. We submit

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