Incorp China

Everything You Need to Know About Tax Rebates in China

The Chinese government had many policies on tax rebates to encourage foreign companies to enter China as well as foreign professionals to work in China. These rebates are usually on taxes that have been paid, including income tax, import tax, VAT (value-added tax), and many others. However, in order to know the qualification of a tax rebate/tax treaty benefits and to claim such privileges, companies or individuals must complete certain forms and submit them to local authorities.

For business, you will need to first submit all the required documents including the business license and any other applicable operating license to the local tax authorities. And then you will need to complete several forms (all of the forms are in Mandarin Chinese). To key here is to prove that you have paid tax on an item that could have returned them as a rebate, under the VAT exempt, or having a preferential common tax refund rate.

It would usually take 3 to 6 months to receive the rebate once all the required documents are being submitted

For individuals, you need to first make the IIT (Individual Income Tax) declaration. Such declarations should be made between March 1st to June 30th every year. To make this process easier, the Chinese national tax bureau has a mobile app which an individual could use to make his/her declaration.

In 2019, the Chinese government has updated its definition for foreign China resident taxpayers. The new definition is based on whether the person has been physically lived in China for a period of half-year, i.e., 183 calendar days. If this is the case, all of your income for Chinese sources would be subject to taxation.

Once all the application is completed, one could submit a form to request rebate or tax treaty benefits. For example, Information Reporting Form of Tax Residence Status of Non-resident Taxpayer and Reporting Form for Non-resident Taxpayer Claiming Tax Treaty Benefits.

You may want to fill these forms if you qualify one of the categories which your salary or ways would be exempt, such as 1) non-resident taxpayers, 2) sent by the United Nation or working of a UN assistance project, 3) sent by the word bank, 4) sent by a donor country to work on a free assistance project, 5) an expert working through non-governmental research agreements in China and who are paid in their his/her own country.

As the entire process is oftentimes entirely in Mandarin Chinese and can be rather long and bureaucratic, you might want to save yourself the headache and opt for hiring a consultant.

Even if you have dealt with Chinese business regulations before, is rather important to have someone on your side. With our expertise, our clients have found it easy to thrive in the world’s largest marketplace.

If you have any questions, please feel free to contact us at info@incorpchina.com, or if you prefer, please call +1 561 729 6508 for a complimentary consultation.