Regulations For The Implementation of the Individual Income Tax Law of The People’s Republic of China (Consultation Draft)” (“Consultation Draft”)
To implement the “PRC Individual Income Tax Law (Amendment)” (“the New IIT Law”), the Ministry of Finance and the State Administration of Taxation have announced the Consultation Draft on 20 October 2018 and the consultation period will be ended by 4 November 2018.
According to the Consultation Draft, individual not domiciled in mainland China but has lived in mainland China for 183 days or more in a calendar year (“183-days-status”), and the 183-days-status continues for less than 5 consecutive years or for 5 consecutive years but in this 5 years, the individual has left mainland China for at least 30 days in a single trip, then this individual would be subject to IIT on his or her China-sourced income only.
On the other hand, if 183-days-status continues in 5 consecutive years and this individual has not left mainland China for 30 days in a single trip in this 5 years, then from the 6th year, this individual will be subject to IIT on his or her global income.
The Consultation Draft means the continuation of the existing tax preferential policy for non-PRC domiciled residents working or retiring in mainland China (including the residents of foreign countries, Hong Kong, Macau and Taiwan) that their non-China sourced income is tax exempted in 5 years.