Foreign Chief Representatives of Rep Office - Tax Return

The resident representative offices of foreign enterprises are usually responsible for the corporation's business contacts, activities, functions with customer solely; Chief Office Representatives are generally expatriates and they may have other expatriates job; how to determine the income tax liability of foreign chief representative of rep office / employees?  Is there any special provision concerning the tax law?

"Ministry of Finance State Administration of Taxation on the Implementation of Certain Provisions of a Tax Treaty Interpretation of Notice" ( ( 86 ) Tax Association No. 015 ) and the State Administration of Taxation issued in 1994, "Those without Domicile in China 's, its Personal Income Tax Liability to Obtain Wage and Salary Issues Notice" ( Guo Shui Fa [ 1994 ] No. 148 ) documents, they start with the same point:    Expatriate Representative Offices in China or other institutions where he should get proceeds from the institution or the company during his tenure of service, the income obtained shall be considered as borne by the institution, regardless of domestic or foreign institutions to pay.   Therefore, expatriates working in the country, office or agency shall be the burden of the domestic part of income in the country and should assume responsibility for taxpayer.

Some taxpayers assume that domestic institutions which do not pay foreign workers for wages but pay by the foreign affiliates to foreign workers in the country of residence for not exceeding 183 days can avoid personal income tax, for the resident representative office chief, this understanding and the "Ministry of Finance State Administration of Taxation on the Implementation of Certain Provisions of a Tax Treaty Interpretation of Notice" ( ( 86 ) Tax Association No. 015 ) it does not match the documentation requirements .

Firstly, for the case of the domestic and foreign positions held simultaneously:-

If the foreign representative works in domestic and holds position at the foreign companies simultaneously, he accesses to wage and salary should be on a reasonable division of some domestic and foreign parts, unless otherwise the tax authority has approved its domestic revenues.

It is advised that in the expatriate labor contract, it is expressly divide the income portion, otherwise it will be divided by the tax authorities and the amount of revenue will be relatively high in domestic portion and the tax burden is relatively heavier.

During the tax year, in the country for residence for not exceeding 183 days, in the case of foreign personnel working, not only part of the burden from the domestic office income is liable to tax but the part of burden of foreign companies are without tax liability.

Secondly, for those who held different positions in various representative offices in the territory simultaneously:-

If the expatriates, while working in the territory for different agencies served as chief representative at the same time, he should be classified according to the above principles, those domestic income and foreign income, and as to whether their income are divided in different offices.   How to divide is not clear under the State Administration of Taxation.   According to "Individual Income Tax Return Measures (Trial) " (Guo Shui Fa [ 2006 ] No. 162)  It provides that if the taxpayer get two or more wages and salary income and to select which is a fixed unit for local relevant tax authorities, so it will not affect the wages and salaries division in any way when calculating the personal income tax.

But for the division office, the staff’s salaries affects the calculation of sales tax and income tax, especially for conversion by appropriation revenue office.  It is required to pay special attention to the relevant local tax authorities for the tax treatment requirements.


(1)   "Ministry of Finance, State Administration of Taxation on Implementation of Certain Provisions of a Tax Treaty Interpretation of Notice" ( ( 86 ) Tax Association No. 015 ) had regulations, for those signed a tax treaty with the country, their residents were assigned to serve as the permanent representative of the representative enterprises or workers  or staff in China which belongs to permanent staff who have a steady job, regardless of whether their wages and salaries , it do not apply the exemption of duration of stay for no more than 183 days.

(2)   State Administration of Taxation in 1994 issued a "No domicile in China to Obtain Wage and Salary Income Individuals Ask Taxpayer Question of Notice"  (Guo Shui Fa [ 1994 ] No. 148) the document states:  all enterprises in China which has foreign personnel, the institutions should use the approved methods for taxable profit or no corporate income tax rather than to use corporate income tax revenues , if that foreign individuals actually have wages and salaries from China during work , whether or not from the Chinese domestic enterprises , the institutions in accounting books and records shall be deemed to be paid by or the Chinese domestic enterprises in China by the institution of burden of wages and salaries.