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Taxation Services

IIT Tax Payment Services

China Tax liability is influenced by factors such as which type of legal entity an employee is working for, along with the position the employee holds. Additionally, changing regulations and new legislation in China can vastly alter the Individual Income Tax (IIT) landscape. This is a landscape that is already complicated by the fact that there is no uniformity throughout the country on the application of IIT. There are for example significant differences even between cities such as Beijing, Shanghai, and Guangzhou. As such, at LehmanBrown we provide an IIT tax payment facilitation service to enable quick and easy deliverance of your tax obligations.

For individuals to pay tax in China (PRC Tax Resident), they need to be domiciled in China (Chinese national). A Non-PRC tax resident tends to be expatriates working in China, whose IIT is determined by:

  1.  Applicability of the tax treaty
    2.   The duration of their domicile in the PRC (People’s Republic of China) in the space of a calendar year (or the tax year)
    3.    Whether the payroll of the expatriate is borne, or deemed as borne, by a PRC entity, or not.
    4.    The position and nature of duties performed by the expatriate

Income subject to IIT depends on the number of days spent in the country and whether the income is paid by a PRC employer. It is also determined by whether income is PRC sourced income or if it is borne, or deemed as borne, by an establishment in the PRC.

For 90 days (or where a treaty applies, 183 days) or less spent in the PRC, only PRC-sourced income, paid by a PRC employer, which is borne or deemed as borne by a PRC entity, is subject to China IIT. Between 90 days (or where treaty applies, 183 days) and a year, only PRC-sourced income, irrespective of the payee, is subject to China IIT. From a year to 5 years, the worldwide income, except the income related to non-PRC services and paid or borne by non-PRC entities, is subject to China IIT. If the stay exceeds 5 years, then one’s entire income is subject to China IIT.

Income derived from PRC sources, irrespective of where the payment is made from (in or out of China), including income from services rendered within China, employment (for example; wages, bonuses, allowances, subsidies, stock options and income related to individual’s position), or the performance of a contract, etc. is taxable. Also taxable is income from leasing of property for use in China, or assignment of properties, for example, buildings, land use rights and more, which are located within China. Furthermore, as well as income from granting licensing rights for use within China and income from interest paid by companies, other economic organisations or individuals in China may be held accountable for tax.

Individual Income Tax Payment payable can be calculated by the below formula:

IIT Payable = Taxable Income x Applicable Tax rate – Quick Calculation Deduction (QCD)

LehmanBrown can help you plan your application for Individual Income Tax refund:

  •  Planning for Expatriates
    •    Non-Tax Benefits
    •    Special Tax Calculation Method for Bonus
    •    Offshore Service and Employment Agreement
    •    Chinese Locals Commercial Insurance
    •    Dual-Employment Agreement
    •    Individual Income Tax
    •    Program Registration
    •    Reporting and Payment

To make an enquiry, please contact us at enquiries@lehmanbrown.com. For information about China IIT Tax Payment Facilitation services LehmanBrown can offer, please see the relevant webpages.