2019 China Individual Income Tax for foreigners: Risk and Planning

2019年外籍个人所得税:风险与筹划

Organizer:China Professionals College(CPC精英管理学院)

Speaker:Miss Bolivia Cheung

Price:RMB3980 /person/day


The Ministry of Finance and State Administration of Taxation issued a few important notices which significantly affect the IIT of foreigners. The new rules have great impacts on the travelers.  They also affect a lot of past practices.  These rules affect the companies and those foreigners working in China. Facing the big changes, what are the risks and possible planning ideas which companies can consider?  In the big data environment, which commonly used methods in the past can’t be used now? Who will be penalized for poor tax planning? The focus of this seminar is risk and planning and the tax filing and using of APP will not be covered. The seminar will be separated into two sessions.  Session one in the morning covers those latest rules issued in March.  Section two covers those rules issued in January 2019 and before.


Case study will be used to explain the rules and regulations.


财政部 国家税务总局在2019年3月公布了一系列对外籍个人有重大影响的个人所得税规定。对于经常往返中国境内境外的外籍个人有重大影响,也改变了以前一贯处理方法。对企业人力资源部门及中国工作的外籍个人有具大影响。面对重大变化,企业要注意哪些风险和可行的筹划方案?在大数据的环境下,哪些以前常见的筹划方法不能再用?胡乱筹划,谁会被罚?是次课程重点是风险与筹划,不会讨论APP操作和具体申报事项。是次讲座分两部分进行,第一部分重点在最新法规的改变及影响;第二部分是2019年1月及以前已出台的规定。


为便于理解,讲座将以个案分析。


Session One        Implications of the new rules (Morning)

1. Taxability and calculation of tax

Using the new rules of March 2019 to analysis the cases below, including:

“days of residence”, “days of stay”, “days of work” – what are the differences?

Who are China tax residents?

Do you need to have tax break?

How can tax treaties affect the taxability and tax exemption?

Why tax exempt and why taxable?

How to disclose and report salaries received outside China?

Which formula to be used? Apportionment of salaries – what are the different from the past calculation method?

Who is liable? The company or the individual?

When should IIT be paid if there is no withholding agent?


第一部分 新法规的影响 (上午)   

1. 征税和计税

以3月公布的规定分析以下个案,包括:

居住天数、停留天数、工作天数三者有何区别?

是否中国税收居民?

要否要安排tax break?

税收协定的原则如何影响征免税?

为何能免税?为何要交税?

境外薪金要如何披露和计税?

用哪一个公式计算?先分后税的公式和以往有何区别?

是个人的责任还是公司的责任?

没有扣缴义务人的,应在何时申报?


Case (1) A Hong Kong citizen day travels to Shenzhen to work.  Salaries are all paid in Hong Kong.  Number of days of residence = 0 but he needs to pay China IIT under treaty but no need to pay tax under Notice 35.  Why?


Case (2) Hong Kong senior management is also the General Manager of China company.  He needs to travel to China for work and sight-seeing.  No salaries are paid in China.  His usual travel pattern is arriving on China on Monday and leaving China on Thursday.  Why he needs to pay IIT?


Case (3) A Taiwan citizen travels to Xiamen on Tuesday and leaving on Thursday.  No salaries are paid in Mainland.  Why he can be exempt from IIT?


Case (4) A German senior management is also the regional CFO.  He needs to visit Singapore once every month for a week.  He gets salaries from both China and overseas.


Case (5) Singapore senior management arrives China on Monday and leaves on Friday every week to home.  Why he is a non-resident?  If the company has treated him as tax resident, what should be done?


Case (6) The chief representative of the Representative Office visits China five days in the year.  Why he needs to pay IIT?


个案(1) 香港人周一到周五每天即日来回深圳上班,没有在中国领工资。居住天数为零,按税收协定要交税,按35号公告可以免税,为什么?


个案(2) 香港高管同时兼任中国的总经理,定期到中国工作及旅游,没有在中国领取工资。一般情况是周一到中国,周四离境。为何要交中国个人所得税?


个案(3) 台湾人平均每周二到厦门,周四离开。没有在中国领工资。为何这人能免税?


个案(4) 德国高管同时兼任亚太总部CFO,每月有一周出差到新加坡。分别在中国和境外领取薪金。


个案(5) 新加坡高管每周一到中国,周五回新加坡和家人会面。工资全部在中国支付。他为何是非居民?如已按居民申报,该怎办?


个案(6) 代表处的外籍首席代表全年来中国五天。为何他要交中国个人所得税?


2.  The calculation of annual bonus for resident and non-resident

2. 非居民的年终奖计算 vs 居民的年终奖计算


3.  A foreigner who has got salaries from companies in China – filed IIT as resident or non resident?

3. 在中国领取工资的外籍个人,应该以居民申报还是非居民申报


Case (7) A foreigner signed a two-year contract from 1 August 2019 to 31 July 2021.  How should the employer file IIT to reduce paying additional tax or tax refund?


个案(7) 2019年8月1月入职,签订两年合同至2021年7月31日,应该如何申报才能减少补税或退税?


4. Tax break and reset the counting

What are the changes in the counting of days?

How to tax break?

The reset of counting and issues to be note in future


4. Tax break 和以前年度清零

数居住天数的方法有何变动?

如何tax break?

清零的规定及未来要注意的问题


5. Non residents can enjoy the tax exempt allowances during the three-year transitional period.  Why?

5. 非居民在过渡期能享受外籍个人八补贴,原因为何?


Session two (Afternoon)第二部分 下午


Case 1

Mr Smith from Germany has worked in Shanghai since 2003.  His wife and children come together with him.  He acquired an apartment in Shanghai.  He has not concerned about the China worldwide tax on foreign income and tax break before.  He is the senior executive of the Chinese headquarters of a US listed group.  He has shares of the US listed company and property in Germany for his parents.

Analysis and discussion

According to IIT law, will he be considered as having domicile in China and hence, subject to worldwide China tax on his foreign income?

How to prove that he does not have a China domicile?


个案一       

来自德国的史密斯先生自2003年起在上海工作,妻子和子女陪同到中国居住,在上海有房长期居住。他一向没有关注境外所得征税以及tax break问题。他现在一家美国上市公司的中国总部工作,境外财产有公司股票以及德国的房子(现时供父母居住)。

分析讨论

根据个人所得税法,他会否是有住所的中国税收居民而境外收入也要交中国税?

他如何才能证明在中国没有住所?


Case 2

Mr Lin is a US citizen working in China and he got the China Green Card and with his family in Shenzhen.  The group was listed in Hong Kong and he has stock option and also shares of the group.

Analysis and discussion

US citizen has to pay US tax on worldwide income.  A China tax resident with domicile has to pay China tax on worldwide income.  Mr Lin has received income from the HK listed company.  Which country shall he pay his tax?


个案二

林先生是美籍华人回中国工作,取得中华人民共和国外国人永久居留身份证,家住深圳。集团在香港上市,他有股票期权也持有股票。

分析讨论

美国公民需要就境内境外所得缴纳美国税。在中国境内有住所的税收居民要就境内境外所得缴纳中国税。那么林先生在香港上市公司取得所得,应该在哪里交税?


Case 3

Ms Huang with Chinese identity card obtained the Hong Kong Identity Card (non-permanent) seven years ago.  She works and lives in Beijing.  She has bank accounts, insurance policies, securities account, property in HK and also used BVI company to hold shares of subsidiaries of overseas and China.  She heard that an overseas trust can help avoiding China tax and she considered executing.

Analysis and discussion

Is it still workable to using BVI company as fire wall under the 2019 IIT law?

BVI company has not distributed any dividend to her and the plan is to wait until she is no longer a China tax resident.  Can this method still workable?

She has received an email from the bank in HK asking about her tax residence.  How should she reply?

What is the information on her foreign assets and income be transferred to China State Administration of Taxation via the CRS / Automatic Exchange of Financial Account Information?

Even though the China tax bureau does not know, shall Ms Huang report her foreign income to the tax bureau?  What are the penalty on non-reporting?

She is considering giving up her Chinese citizenship.  What are the tax procedures from 2019 onward?

If she does not give up her Chinese citizenship, how can she become a non-China tax resident?

She is considering transferring her foreign assets to a trust.  Will this trigger any China tax?

Can her avoid CRS information exchange under the trust?


个案三

黄女士在七年前取得香港身份证(并非永久居民),同时也有中国身份证。她现在北京居住和工作。她在香港有银行户口、保险投资、证券公司股票户口、房产和通过BVI公司投资境外子公司和中国公司。她听说用境外信托可以避税,现考虑进行。

分析讨论

她以BVI公司作为防火墙,按2019年税法,还有用吗?

BVI公司取得利润后一直没有分股息,目的是留待她不是中国税收居民时才派股息,这方式仍能用吗?

她收到香港银行询问她的税收居民身份的邮件,她应该如何回答?

她境外的财产资料,哪些会通过CRS被中国的税局知道?

即使税局不知道,她要否自己申报境外收入?不申报有何责任?

她打算放弃中国国籍。按2019年的税法,要办理什么税务手续?

若不放弃中国国籍,她如何才能不做中国税收居民?

她打算把境外财产注入信托,这过程会有中国税吗?

注入信托后能否避免CRS?


Case 4

The company paid for commercial insurance, liability insurance and travel insurance for staff on business trips.  The Group also paid overseas mandatory social security contribution for expatriates working in China.

Analysis and discussion

Which types of insurances are subject to IIT? Which types are not taxable?

How to book the insurances in the accounts so that the amount can be deductible for enterprise income tax?

Are the mandatory social security contributions in foreign countries taxable in China? Can the employee’s contribution be tax exempt?


个案四

公司为员工买商业保险、责任保险、出差的旅游保险。集团也为在中国工作的外籍员工支付当地的社会保险。

分析讨论

哪些保险要计入工资薪金计税?哪些不用?

要如何入账才能在企业所得税前扣除?

境外支付的当地社保,公司负担部分要征税吗?员工负担部分能减除吗?


Case 5

Mr Zhu has Chinese identity card.  The Group paid him salaries in China and director’s fee in Hong Kong.

Analysis and discussion

According to HK tax ordinance, Mr Zhu has to pay HK tax on his director’s fee from HK company.  If so, is this not taxable in China?

If the director’s fee is also taxable, how to calculate and pay China IIT?

Does the Chinese employer has withholding obligation on the overseas director’s fee?


个案五

朱先生有中国身份证,集团公司分别在中国境内支付薪金和在香港支付董事费。

分析讨论

朱先生按香港税务条例,需就董事费缴纳香港税。已交香港税,是否不用交中国税?

如要交中国税,如何交?

中国公司有没有扣缴董事费税款责任?


Case 6

A foreign lawyer of a multinational law firm in Beijing who received overseas profit was required to pay back IIT of RMB8 million. 

Analysis and discussion

l   Why the overseas dividend becomes taxable in China?


个案六

某国际知名的律师事务所北京外籍合伙人在境外取得的分红,最终要在中国交800多万税。

分析讨论

为什么境外分红也要交税?


Other issues

The common questions on six specific additional deductions

The treatments and options for transitional period

其他事项讨论

六项专项附加扣除的常见问题

过渡期的处理和选择


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Speaker

Miss Bolivia Cheung, Founder and Director, BC Training Co Ltd (FCCA and FCPA)


Bolivia has over 20 years of experience on China tax and business advisory.  She joined KPMG in 1996, promoted to partnership in 8 years and retired from a tax partner in 2011 after working in KPMG for 15 years. She frees up herself for training, education, free-lance consultancy projects and charitable activities, and completed the MA in Practical Philosophy, her second master degree.  Bolivia has stationed in Guangzhou and Shanghai for over 8 years which means a lot of practical experiences in dealing with problems and issues of taxpayers.


张少云(FCCA & FCPA), 必思培训有限公司创办人及董事


张少云在中国税务和商业咨询方面有二十多年的经验。她自1996年加入毕马威会计师事务所中国税务部,八年内进升为合伙人,在毕马威中国工作了十五年后,她选择于2011年从税务合伙人角色退休,以自由职业者身份投入企业培训、教育、慈善活动以及独立咨询工作并完成她第二个硕士学位,实践哲学硕士。她曾长驻广州和上海超过八年,这段日子令她更能以实务角度出发解决客户的税务问题。


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《2019年外籍个人所得税:风险与筹划》

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