Regulations for the exemption of income from wages and salaries of foreign individuals

The income from wages and salaries of correspondents in China shall be taxable according to the regulations on IIT for foreigners working in China. If they require exemption, the procedures shall be handled through diplomatic channels on the principle of reciprocity, that is to say, only when their countries clearly stipulate that the ITT of Chinese correspondents can be exempted, can their IIT be exempted in China.

Exemption regulations for subsidies and allowances granted to foreign individuals

(1) Housing, food allowance and laundry fee

Reasonable housing subsidies, food subsidies and laundry expenses of foreign individuals obtained by non-cash or on an actual reimbursement basis shall be exempted from individual income tax. The taxpayer should provide valid certificates to the competent tax authorities for examination and approval the first time he or she obtains the aforesaid subsidies or the month following any change to the amount or method of payment of the above subsidies.

(2) Relocation fee

Any relocation income a foreign individual acquires for working in or resigning from a position in China, paid by way of complete reimbursement, shall be exempted from personal income tax. The taxpayer shall provide valid certificates to the tax authorities in China for examination and approval.

(3) Travel allowance

Reasonable domestic and foreign travel allowance is exempt from individual income tax. The transportation fee, lodging fee certificate (copy) or business trip plan shall be provided by taxpayer and reviewed by the competent tax authorities to confirm the tax exemption.

(4) Visiting fee

Individual income tax shall be exempted for any family visit fees obtained by foreign individuals. The taxpayer should provide transportation expenditure vouchers for the family visit (copy), which shall be examined and approved by the competent tax authorities. Moreover, the preferential treatment of tax exemption only applies to the foreigner’s travelling between his or her employment places in China and the place of his or her family (including the residence of his or her spouses or parents) no more than twice a year.

(5) Language training fee and allowance for children's education

Individual income tax shall be exempted for language training fees and allowance for children's education received by foreign individuals. The taxpayer shall provide the vouchers and time limit documents for the acceptance of the above-mentioned education within the territory of China, which will be examined and approved by the competent tax authorities.

Regulations for the exemption of income from interest, dividends and bonuses of foreign individuals

(1) Income from interest, dividends and bonuses earned by foreign individuals from foreign-invested enterprises may be exempted from IIT. ( Notices on Some Policy Issues on Personal Income Tax released by the Ministry of Finance and State Administration of Taxation Document: Caishuizi No 0202[1994])

(2) Dividends (bonuses) received by foreign individuals holding B-shares or overseas shares (including H-shares) from China-based enterprises which issued such shares are temporarily exempted from individual income tax. (Letter of the SAT on Taxation Issues regarding Dividends Received by Foreign Individuals Holding Shares of China-based Listed Companies Document: Guoshuihanfa No 440 [1994]).