Announcement of the Ministry of Finance and the State Taxation Administration on the Individual Income Tax Policies for Non-resident Individuals and Resident Individuals Having No Place of Abode in China
Announcement of the Ministry of Finance and the State Taxation Administration on the Individual Income Tax Policies for Non-resident Individuals and Resident Individuals Having No Place of Abode in China
Announcement of the Ministry of Finance and the State Taxation Administration on the Individual Income Tax Policies for Non-resident Individuals and Resident Individuals Having No Place of Abode in China
Announcement of the Ministry of Finance and the State Taxation Administration [2019] No.35
March 14, 2019
With the view of implementing the revised Individual Income Tax Law of the People's Republic of China (the "Tax Law") and the Implementing Regulations of the Individual Income Tax Law of the People's Republic of China (the "Implementing Regulations"), individual income tax policies for non-resident individuals and resident individuals having no place of abode in China (the "individuals having no place of abode") are hereby announced as below:
I. About the Place of Source of Income
1. Provisions on the place of source of the income from wages and salaries.
The income from wages and salaries obtained by individuals in the period of work within the territory of China (the "in China") is the income from wages and salaries from China. The period of work in China is calculated by the number of days an individual works in China, including the number of actual working days in China, and public holidays, personal leave, and days of receiving training by the individual, at home and abroad in the period of work in China. Where an individual takes office at both domestic and overseas entities or only at an overseas entity, if he/she stays for less than 24 hours in China in a day, the number of domestic working day will be calculated by half a day.
Where an individual having no place of abode takes office at both domestic and overseas entities or only at an overseas entity, and works at home and abroad simultaneously in the current period, the amount of income from domestic and overseas wages and salaries will be determined by the percentage of the number of working days at home and abroad relating to the domestic and overseas wages and salaries in the number of calendar days in the current period. The number of overseas working days shall be calculated by the number of calendar days in the current period less the number of domestic working days in the current period.
2. Provisions on the place of source of the income from several months' bonuses and equity incentives.
Where the place of source of the income is determined for the income from several months' salaries or equity incentives obtained by an individual having no place of abode as per Paragraph 1 of this article, the part attributable to overseas work period of the income from several months' bonuses or equity incentives of the individual for his/her work or fulfillment of duties in China shall be the income from overseas wages and salaries; the part attributable to domestic work period of the income from several months' bonuses or equity incentives received by the individual after the termination of contract performance or fulfillment of duties in China shall be the income from domestic wages and salaries. Specific calculation method is: several months' bonuses or equity incentives multiplied by the percentage of the number of domestic working days in the work period which the several months' bonuses or equity incentives are attributable to in the number of calendar days of the abovementioned work period.
Where the domestic and overseas several months' salaries or equity incentives obtained by an individual having no place of abode in one month include several sums of income for different periods, the income from China in different periods shall be calculated respectively in accordance with the Announcement of the Ministry of Finance and the State Taxation Administration on the Individual Income Tax Policies for Non-resident Individuals and Resident Individuals Having No Place of Abode in China (the "Announcement"), and then be summed up so as to calculate the taxable income from several months' bonuses or equity incentives from China in the month.
For the purpose of the Announcement, several months' bonuses refer to wages and salaries including bonuses, year-end bonuses and dividends attributable to several months and obtained once, excluding the bonuses regularly paid each month and several months' wages paid once. For the purpose of the Announcement, the equity incentives include stock options, equity options, restricted stocks, stock appreciation right, equity awards as well as other discounts or subsidies obtained from employers because of the subscription of negotiable securities such as stocks.
3. Provisions on the place of source of the income from remunerations of directors, supervisors and senior executives.
The director fees, supervisor fees, wages and salaries or other similar remunerations (the "remunerations of senior officers", including several months' bonuses and equity incentives) paid or borne by domestic resident enterprises for individuals taking positions of directors, supervisors and senior managers and other senior management positions at such domestic resident enterprises (the "senior executives"), no matter whether they fulfill duties in China, are the income from China.
For the purpose of the Announcement, senior management positions include positions of general and deputy (general) managers, chief engineers of all functions, directors and other similar management positions.
4. Provisions on the place of source of the income from author's remuneration.
The income from author's remuneration paid or borne by any domestic enterprise, public institution or other organization is the income from China.
II. Calculation of the Taxable Income from Wages and Salaries of Individuals Having No Place of Abode
Concerning the income from wages and salaries obtained by individuals having no place of abode, the amount of taxable income from wages and salaries (the "taxable income from wages and salaries") from China shall be calculated as per the following provisions:
1. The circumstance where individuals having no place of abode are non-resident individuals.
Except for Paragraph 3 of this article, the taxable income from wages and salaries of a non-resident individual in a month shall be calculated as per the following two situations respectively:
(1) The circumstance where the time of residence of non-resident individuals in China is less than 90 days cumulatively.
In one tax year, for a non-resident individual residing in China for not more than 90 days cumulatively, the individual income tax shall be calculated and paid only for wages and salaries attributable to domestic work period and paid or borne by a domestic employer. The calculation formula of the taxable income from wages and salaries in the current month is as below (Formula I):
Taxable income from wages and salaries in the current month = total amount of domestic and overseas wages and salaries in the current month * (amount of wages and salaries paid in China in the current month / total amount of domestic and overseas salaries in the current month) * (number of domestic working days in the work period which wages and salaries in the current month are attributable to / number of calendar days in the work period which wages and salaries in the current month are attributable to)
For the purpose of the Announcement, domestic employers include domestic entities and individuals as well as organizations and places in China of overseas entities or individuals employing employees.
......
Announcement of the Ministry of Finance and the State Taxation Administration [2019] No.35
March 14, 2019
With the view of implementing the revised Individual Income Tax Law of the People's Republic of China (the "Tax Law") and the Implementing Regulations of the Individual Income Tax Law of the People's Republic of China (the "Implementing Regulations"), individual income tax policies for non-resident individuals and resident individuals having no place of abode in China (the "individuals having no place of abode") are hereby announced as below:
I. About the Place of Source of Income
1. Provisions on the place of source of the income from wages and salaries.
The income from wages and salaries obtained by individuals in the period of work within the territory of China (the "in China") is the income from wages and salaries from China. The period of work in China is calculated by the number of days an individual works in China, including the number of actual working days in China, and public holidays, personal leave, and days of receiving training by the individual, at home and abroad in the period of work in China. Where an individual takes office at both domestic and overseas entities or only at an overseas entity, if he/she stays for less than 24 hours in China in a day, the number of domestic working day will be calculated by half a day.
Where an individual having no place of abode takes office at both domestic and overseas entities or only at an overseas entity, and works at home and abroad simultaneously in the current period, the amount of income from domestic and overseas wages and salaries will be determined by the percentage of the number of working days at home and abroad relating to the domestic and overseas wages and salaries in the number of calendar days in the current period. The number of overseas working days shall be calculated by the number of calendar days in the current period less the number of domestic working days in the current period.
2. Provisions on the place of source of the income from several months' bonuses and equity incentives.
Where the place of source of the income is determined for the income from several months' salaries or equity incentives obtained by an individual having no place of abode as per Paragraph 1 of this article, the part attributable to overseas work period of the income from several months' bonuses or equity incentives of the individual for his/her work or fulfillment of duties in China shall be the income from overseas wages and salaries; the part attributable to domestic work period of the income from several months' bonuses or equity incentives received by the individual after the termination of contract performance or fulfillment of duties in China shall be the income from domestic wages and salaries. Specific calculation method is: several months' bonuses or equity incentives multiplied by the percentage of the number of domestic working days in the work period which the several months' bonuses or equity incentives are attributable to in the number of calendar days of the abovementioned work period.
Where the domestic and overseas several months' salaries or equity incentives obtained by an individual having no place of abode in one month include several sums of income for different periods, the income from China in different periods shall be calculated respectively in accordance with the Announcement of the Ministry of Finance and the State Taxation Administration on the Individual Income Tax Policies for Non-resident Individuals and Resident Individuals Having No Place of Abode in China (the "Announcement"), and then be summed up so as to calculate the taxable income from several months' bonuses or equity incentives from China in the month.
For the purpose of the Announcement, several months' bonuses refer to wages and salaries including bonuses, year-end bonuses and dividends attributable to several months and obtained once, excluding the bonuses regularly paid each month and several months' wages paid once. For the purpose of the Announcement, the equity incentives include stock options, equity options, restricted stocks, stock appreciation right, equity awards as well as other discounts or subsidies obtained from employers because of the subscription of negotiable securities such as stocks.
3. Provisions on the place of source of the income from remunerations of directors, supervisors and senior executives.
The director fees, supervisor fees, wages and salaries or other similar remunerations (the "remunerations of senior officers", including several months' bonuses and equity incentives) paid or borne by domestic resident enterprises for individuals taking positions of directors, supervisors and senior managers and other senior management positions at such domestic resident enterprises (the "senior executives"), no matter whether they fulfill duties in China, are the income from China.
For the purpose of the Announcement, senior management positions include positions of general and deputy (general) managers, chief engineers of all functions, directors and other similar management positions.
4. Provisions on the place of source of the income from author's remuneration.
The income from author's remuneration paid or borne by any domestic enterprise, public institution or other organization is the income from China.
II. Calculation of the Taxable Income from Wages and Salaries of Individuals Having No Place of Abode
Concerning the income from wages and salaries obtained by individuals having no place of abode, the amount of taxable income from wages and salaries (the "taxable income from wages and salaries") from China shall be calculated as per the following provisions:
1. The circumstance where individuals having no place of abode are non-resident individuals.
Except for Paragraph 3 of this article, the taxable income from wages and salaries of a non-resident individual in a month shall be calculated as per the following two situations respectively:
(1) The circumstance where the time of residence of non-resident individuals in China is less than 90 days cumulatively.
In one tax year, for a non-resident individual residing in China for not more than 90 days cumulatively, the individual income tax shall be calculated and paid only for wages and salaries attributable to domestic work period and paid or borne by a domestic employer. The calculation formula of the taxable income from wages and salaries in the current month is as below (Formula I):
Taxable income from wages and salaries in the current month = total amount of domestic and overseas wages and salaries in the current month * (amount of wages and salaries paid in China in the current month / total amount of domestic and overseas salaries in the current month) * (number of domestic working days in the work period which wages and salaries in the current month are attributable to / number of calendar days in the work period which wages and salaries in the current month are attributable to)
For the purpose of the Announcement, domestic employers include domestic entities and individuals as well as organizations and places in China of overseas entities or individuals employing employees.
......