Important! China Extends Tax Exemptions for Expats to 2023
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Expatriates working in China can enjoy preferential tax policies for income from certain benefits and compensation for one more year until the end of 2023 as part of the country’s broader tax incentives to boost domestic spending.
The Ministry of Finance and the State Taxation Administration Friday announced (click "Read More" below to read in Chinese) the extension of the tax exemption for foreign expatriates’ fringe benefits — additional perks offered by employers to people working abroad including subsidies on rent, language training and children’s education.
The exemption, offered since Jan. 1, 2019, was originally set to expire at the end of 2022.
Why This Matters?
Multinationals had been worried that the imminent termination of tax breaks for expatriates might lead to an exodus of top talent due to rising living costs.
Some business groups urged tax authorities to postpone the change, Bloomberg reported.
The extended tax benefit for foreign residents is part of China’s recently released tax relief measures as the government moves to encourage household spending to stimulate growth.
The taxation authority earlier this week said some personal income tax breaks will be extended into the new year, and preferential taxes on year-end bonuses will also stay in place until the end of 2023.
Summary
This is a good news for expats who were worried benefits such as child education fees, housing, and year-end bonuses will become taxable, and it might take a chunk out of their net income. Well, there is no need to worry about it, at least for now until the end of 2023.
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