Legal Concept of Individual Expatriates Tax

According to the "PRC Individual Income Tax Law," an individual who has domicile in China, or non-domiciled and resided for a full year, whether he derives incomes from inside or outside China, according to the laws in China, he should pay personal income tax.   In China, there is someone who is neither domiciled nor resident or non-domiciled and resident for less than one year, these incomes are derived from China should be legally obligated to pay personal income tax.    Expatriates in China that without domicile or residence in the territory, whether he residents for at least one year and its income is from domestic or to foreign are determining the tax base.

"Living in China for One Year" means during the tax year, if he has lived in China for 365 days  [During this period, the taxpayer has temporary departure, continuously for a period for not exceeding 30 days and accumulated for no more than 90 days, is not deductible days].

Individuals who work in China has actually get wage and salary.  Whether paid by the domestic enterprises or the foreign enterprises to him, it should be paid by the employer, it shall be regarded as sources from and within China;
During his actual work in China, working in China should be included in the territory.   During which, whether inside and outside to enjoy the public holidays, a person who has leave days and the number of days for receiving training;

In practice, an individual who works outside China and obtains wage and salary, whether paid by the domestic enterprises or foreign enterprises, the individuals are paid by the employer, it belongs that the incomes are derived from outside China.

If the actual work is outside China, it is in China that serves as overseas business institutions and overseas to perform business outside the scope of provision of services, the period which includes public holidays.

Tax policy in China for those expatriates who live shorter, it depends on the specific circumstances to give tax breaks:-   During a tax year, in China or for a period of not exceeding 90 working days or its nationality has signed a tax treaty with China, the agreement provides for, in China during the period or a period of not exceeding 183 days residing by foreigners, only the actual work in China during which the domestic enterprises or that individuals in China are paid by the employer or by a body which is regarded as taxable income, the burden of wage and salary.   Income tax returns should be prepared by foreign employers and should not be prepared by the employer to pay the domestic institutions which pay salaries and wages, it is exempted from personal income tax returns.   The tax does not apply to domestic enterprise’s directors, senior management staff.

Domestic enterprises’ senior management positions:    It refers to, in the company, its vice (general) managers, the functions of chief engineer, director of the company's management and other similar duties.   As the domestic enterprises’ directors or senior management, the individuals which was acquired by the domestic enterprise and paid  the director fees, salary or wages, it do not apply the provisions of tax incentives, but it should serve in the local Chinese territory since its directors or senior management positions in this business discharging these duties for a period, whether or not to perform duties outside of China, to declare their personal income tax; they acquire the Chinese overseas enterprises to pay wages and salaries for taxpayers with foreign taxpayers in general.

Summary:  Where the expatriates work in China, regardless of the length of time, it should be paid by the Chinese domestic enterprises or individuals in China to pay as an employer or by a body with burden of wage and salary for income tax ; during the tax year, in a period or periods aggregating for more than 90 days for residence, the period specified in the tax treaty or periods of residence for more than 183 days, to respond to all of its territory income tax ; if resides in China for one year, whether the source from inside or outside China, it derives income, it should pay personal income tax in China.  Meanwhile, the Chinese government has given special personal income tax as incentives for some industries' expatriates.