On March 16, 2019, the ministry of finance and the state administration of taxation issued announcement no. 34 of 2019: “the criteria for determining the residence time of individuals without domicile in China”. Stating that for previous residence years, including 2018, will be zero. The day of entry and departure will also be counted as the number of days.
The terms are as follows:
01
For a tax year in which an individual without a domicile has resided in China for a cumulative total of 183 days: if he has resided in China for a total of 183 days in each of the previous six years and has not left China for more than 30 days in any one year, he shall pay individual income tax on income derived from sources within or outside China in that tax year;
If the cumulative number of days of residence in China in any of the previous six years is less than 183 days or the number of days for a single departure from China is more than 30 days: income derived from and paid by entities or individuals outside China in that tax year shall be exempted from individual income tax.
The preceding six years shall mean six consecutive years from the preceding year to the preceding six years of the tax year, and the beginning of the preceding six years shall commence in the year after 2019 (inclusive).
02
The cumulative number of days an individual without a domicile has resided in China in one tax year shall be calculated on the basis of the cumulative number of days an individual has resided in China.
Those who have spent 24 hours on the day of their stay in China shall be counted as days of residence in China, and those who have spent less than 24 hours on the day of their stay in China shall not be counted as days of residence in China.
The new rules mean that all foreign nationals (including Hong Kong, Macao and Taiwan) living on the mainland before 2019 will be wiped out. The starting point of the annual “full six years” in a row with a cumulative residence of 183 days in China is the year starting from 2019 (inclusive).
After 2019, during the period from 2019 to 2024, an individual without a domicile who has resided in China for a total of 183 days for a consecutive year of fewer than six years shall be exempted from individual income tax on the income paid abroad.
For example:
Mary has been working in China since 2012, more than 6 years.
However, as the new rules states, the years before 2018 will not count towards her.
It will begin in 2019.
If Mary resides in China from now, 2019, until 2024 for 183 consecutive days, she will be exempt from individual income tax for her overseas income paid abroad.
If Mary left China for more than 30 days, her continuous years of residence on mainland China will reset and the 183 days will start anew.
The government is determined to release the income tax preference to all foreigners!