Tax Identity
- Resident:
- Individuals who have a domicile in China
- Individuals who do not have a domicile in China but have resided in China for an aggregate of 183 days or more within a tax year.
- Non-resident:
- Individuals who do not have a domicile in China and not resided in China.
- Individuals who do not have a domicile in China but have resided in China for less than 183 days in aggregate within a tax year.
Resident – Accumulation Calculation:
- Calculate and withhold by employer
- IIT is calculated in a cumulative way within 1 tax year
- “ATR” is required in every Mar to Jun by individual, including those Chinese working overseas
- 2% refund of taxes to companies as an incentive
| Grade | Annual Taxable Income | Tax Rate (%) | Quick Deduction Amount (RMB) |
|---|---|---|---|
| 1 | ≤36,000 | 3 | 0 |
| 2 | 36,000 – 144,000 | 10 | 2,520 |
| 3 | 144,000 – 300,000 | 20 | 16,920 |
| 4 | 300,000 – 420,000 | 25 | 31,920 |
| 5 | 420,000 – 660,000 | 30 | 52,920 |
| 6 | 660,000 – 960,000 | 35 | 85,920 |
| 7 | >960,000 | 45 | 181,920 |
Non-Resident – Calculated by Month/Time:
- Calculate and withhold by employer
- IIT is calculated on monthly basis or time basis
- No need to conduct ATR
| Grade | Annual Taxable Income | Tax Rate (%) | Quick Deduction Amount (RMB) |
|---|---|---|---|
| 1 | ≤3,000 | 3 | 0 |
| 2 | 3,000 – 12,000 | 10 | 210 |
| 3 | 12,000 – 25,000 | 20 | 1,410 |
| 4 | 25,000 – 35,000 | 25 | 2,660 |
| 5 | 35,000 – 55,000 | 30 | 4,410 |
| 6 | 55,000 – 80,000 | 35 | 7,160 |
| 7 | >80,000 | 45 | 15,160 |
Employer Tax Practice for Expatriate
- Tax identity prejudge – beginning of each tax year
- Tax identity final confirm – end of each tax year
- Tax correction due to tax identity change – year end process
- BIK and tax exemption (rental, meal, child education, etc.)
- Dual contract
Corporate Income Tax (CIT)
Companies in China are subject to corporate income tax (CIT) at a standard rate of 25%. However, certain industries and regions may enjoy preferential rates, such as:
- High-Tech Enterprises: Eligible for a reduced rate of 15%.
- Small and Low-Profit Enterprises: May benefit from lower rates depending on annual taxable income.
CIT is calculated based on the company’s taxable income, which includes all revenue sources minus allowable deductions.
Value-Added Tax (VAT)
VAT is applied to the sale of goods and services. The standard VAT rates are:
- 13%: Applicable to most goods and services.
- 6%: Applicable to specific services such as financial and insurance services.
Certain goods and services may be exempt from VAT or subject to reduced rates.
Tax Compliance
Employers and companies must ensure timely and accurate tax filings to avoid penalties. Key compliance requirements include:
- Monthly IIT Withholding: Employers must withhold and remit IIT on a monthly basis.
- Quarterly and Annual CIT Filings: Companies must file CIT returns quarterly and annually.
- VAT Invoices: Proper issuance and management of VAT invoices are crucial for compliance and claiming input tax credits.
Importance of Tax Planning
Effective tax planning is essential for:
- Legal Compliance: Avoiding fines and legal issues by adhering to tax regulations.
- Financial Efficiency: Optimising tax liabilities and taking advantage of available tax incentives.
- Business Strategy: Supporting long-term business goals through strategic tax planning.
Employers should provide resources and support to employees regarding tax matters and ensure that all tax obligations are met promptly.
We Provide Expertise on Work Visa Applications!
Our professional team of 200+ has years of experience dealing with local immigration authorities and will ensure an efficient turnaround of your employee’s visa application.
Want to stay up to date with the latest labour laws?
Our publications give you a clear overview of key labour law regulations. We cover major tax, labour law, payroll and visa information. It is designed to get you updated at-a-glance!
Please note that all the information listed below are to be used as a general guideline. For more detailed accounts of China employment laws and regulations, please visit the official governmental websites.
Updated on: September 2025
Contact Us
Get in touch with one of us today to start streamlining your HR processes across Asia & the Middle East.
