Taxation FAQ's

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Do foreign employees have to pay China taxation and on what basis is this calculated when their salaries are paid offshore?

Where a foreign employee is not a China domiciled individual and receives remuneration from a foreign employer whereby the payment not borne by the company in China, the income tax payable will depend on the length of residence in China in a year as follows :

กค               Not more than 90 days: exempt from paying income tax.

กค               More than 90 days but less than 5 years: Income tax is payable on China source income during the period during the period of residence in China.

กค               Over 5 years: Income tax is payable on worldwide income from the 6th year.

The above is a general rule, though there are in place bilateral tax treaties with some countries, providing an extra source of rules for interpreting the term "residence".

Where the employee is paid predominantly off-shore, the employee will need to declare the element that is associated with the work conducted in China on behalf of the company's entity there.