Individual Income Tax Planning for Expatriates in China, 6th Edition (includes FREE one year access of ONLINE version)

PART I — INDIVIDUAL INCOME TAX

Chapter 1 Overview......................................................................p 3

• The Individual Income Tax Law........................................¶1-001
• Historical background........................................................¶1-002
• Present legal framework....................................................¶1-003
• Further reforms proposed...................................................¶1-004

Chapter 2 Liability to Tax.............................................................p 7

• Basis of tax liability ..........................................................¶2-001
• Individuals domiciled in China..........................................¶2-002
• Expatriates living in China (one full year..........................¶2-003
• Expatriates living in China for more than 90 days
• but less than one year...................................................¶2-004
• Temporary visitors (90 days or less...................................¶2-005
• Expatriate directors and senior managers .........................¶2-006
• Calculating length of stay in China....................................¶2-007

Chapter 3 Taxable Income and Deductions .............................p 21

• Taxable income..................................................................¶3-001
• China-sourced income ......................................................¶3-002
• Employment income (wages and salaries).........................¶3-003
• Stock options.....................................................................¶3-004
• Insurance and social security benefits for expatriates........¶3-005
• Production and business income........................................¶3-006
• Contracting or leasing operations income.........................¶3-007
• Personal service income.....................................................¶3-008
• Partnership and sole-proprietorship income .....................¶3-009
• Remuneration for manuscripts and artistic works.............¶3-010
• Royalty income .................................................................¶3-011
• Interest income, equity dividends and principal share dividends ............................................................¶3-012
• Property leasing income ....................................................¶3-013
• Assignment of property income ........................................¶3-014
• Contingency income..........................................................¶3-015
• Other unclassified income .................................................¶3-016
• Deduction for donations ....................................................¶3-017

Chapter 4 Exemptions and Reductions ....................................p 47

• Exemptions........................................................................¶4-001
• Housing fund contributions, medical insurance and pension contributions for local staff.............................¶4-002
• PRC Social Insurances for foreigners legally working in China .......................................................................¶4-003 
• Overseas Insurance and social security benefits provided to expatriates ................................................¶4-004
• Employment benefits received by foreigners.....................¶4-005
• Income derived by foreign experts working under development or exchange programmes........................¶4-006
• Dividend income received by foreigners...........................¶4-007
• Income derived from transfer of family living quarters ........................................................................¶4-008
• Income derived from share transfers ................................¶4-009
• Interest derived from saving in Chinese domestic banks............................................................................¶4-010
• Monetary awards ...............................................................¶4-011
• Withholding tax service fee...............................................¶4-012
• Reductions ........................................................................¶4-013

Chapter 5 Tax Calculation .........................................................p 55

• General rules......................................................................¶5-001
• Tax on wages and salaries .................................................¶5-002
• Calculation of tax where tax liability is borne by employer ......................................................................¶5-003
• Time apportionment of an expatriate’s wages...................¶5-004
• Calculation of tax on less than one month’s wages or daily wages ..................................................................¶5-005
• Calculation of tax on annual bonuses ...............................¶5-006
• Calculation of tax on stock options....................................¶5-007
• Taxation of Stock Appreciation Rights and Restricted Stock ............................................................................¶5-008
• Tax on production and business income ...........................¶5-009
• Tax on income from contracting or leasing operations.....................................................................¶5-010
• Tax on income from personal services .............................¶5-011
• Tax on remuneration for manuscripts ...............................¶5-012
• Tax on royalties and income from leasing property .........¶5-013
• Tax on income from assignment of property.....................¶5-014
• Tax on interest, dividends and other portfolio income .....¶5-015
• Tax on non-monetary assets...............................................¶5-016
• Tax credits..........................................................................¶5-017

Chapter 6 Tax Registration, Account Books and Vouchers ................................................................................p 87

• Tax registration .................................................................¶6-001
• Account books and vouchers ............................................¶6-002

Chapter 7 Tax Returns and Payment of Tax ............................p 91

• Deemed “withholding agents” ..........................................¶7-001
• Obligation to withhold tax ................................................¶7-002
• Withholding agents’ administrative obligations ...............¶7-003
• Self-reporting by taxpayers................................................¶7-004
• Tax returns required to be filed and samples of official invoice (“fapiao”)............................................¶7-005
• Practical guide to completing returns................................¶7-006
• How to lodge a return........................................................¶7-007
• Time limits for returns and tax payments .........................¶7-008
• Settlement of tax upon departure from China....................¶7-009
• Tax refund..........................................................................¶7-010
• Tax undercharged...............................................................¶7-011
• Tax certificate ....................................................................¶7-012

Chapter 8 Investigations, Disputes and Penalties ..................p 105

• Investigations ....................................................................¶8-001
• Dispute over payment of tax .............................................¶8-002
• Dispute over penalty or enforcement measures.................¶8-003
• Penalties generally.............................................................¶8-004
• Default by taxpayer in compliance matters ......................¶8-005
• Default by withholding agent in compliance matters........¶8-006
• Tax evasion........................................................................¶8-007
• Tax evasion penalties ........................................................¶8-008
• Punishment for tax officials ..............................................¶8-009
• Refusing to pay tax using violence or threats....................¶8-010
• Recovery of unpaid tax......................................................¶8-011

PART II — TAX TREATIES

Chapter 9 Tax Treaties ..............................................................p 115

• Overview ...........................................................................¶9-001
• Structure of tax treaties......................................................¶9-002
• China’s tax treaties ............................................................¶9-003

Chapter 10 General Application of Treaties............................p 119

• Persons eligible for treaty benefits ..................................¶10-001
• Taxes covered..................................................................¶10-002
• Territorial scope ..............................................................¶10-003
• Entry into force and termination .....................................¶10-004
• Treaty interpretation ........................................................¶10-005
• Non-discrimination..........................................................¶10-006
• Mutual agreement procedure and exchange of information ................................................................¶10-007

Chapter 11 Taxation of Individuals.........................................p 131

• Income from dependent personal services ......................¶11-001
• Income from independent personal services ...................¶11-002
• Directors’ fees .................................................................¶11-003
• Entertainers’ and athletes’ income ..................................¶11-004
• Pensions...........................................................................¶11-005
• Remuneration and pensions for Government service......¶11-006
• Business apprentices’ and trainees’ income ....................¶11-007
• Diplomatic agents’ and consular officers’ income ..........¶11-008
• Teachers’ and researchers’ income ..................................¶11-009
• Definition of “permanent establishment” .......................¶11-010
• Property income and capital gains ..................................¶11-011

Chapter 12 Dividends, Interest and Royalties........................p 153

• Payments to non-residents subject to
• withholding tax..........................................................¶12-001
• Dividends ........................................................................¶12-002
• Interest.............................................................................¶12-003
• Royalties .........................................................................¶12-004

Chapter 13 Elimination of Double Taxation ..........................p 161

• Methods of eliminating double taxation .........................¶13-001
• Tax credit method ...........................................................¶13-002
• Tax exemption method.....................................................¶13-003
• Elimination of double taxation of dividends, interest and royalties .................................................¶13-004
• Mainland China/Hong Kong double taxation arrangement ...............................................................¶13-005
• Mainland China /Macau double taxation arrangement................................................................¶13-006
• New development in double taxation arrangements with Hong Kong and Macau......................................¶13-007
• Mainland China / United States double tax treaty...........¶13-008
• Mainland China / Canada double tax treaty.....................¶13-009
• Mainland China / Japan double tax treaty.......................¶13-010
• Mainland China / Korea double tax treaty.......................¶13-011
• Mainland China / Singapore double tax treaty................¶13-012
• Mainland China / Australian double tax treaty................¶13-013
• Mainland China / New Zealand double tax treaty...........¶13-014
• Mainland China / United Kingdom double tax treaty......¶13-015
• Taiwan individuals working in Mainland China..............¶13-016

PART III — TAX PLANNING

Chapter 14 Tax Planning Overview.........................................p 195

• Structure of compensation package ................................¶14-001
• Relocation allowances.....................................................¶14-002
• Assignment allowances....................................................¶14-003
• Traditional expatriate package.........................................¶14-004
• Local plus allowances package (no tax equalisation) .....¶14-005

PART V — LEGISLATION

• Legislation in English
• Legislation in Chinese

APPENDICES