Tax and social insurance for foreigners

The 183-day threshold

The basic rule: an individual who spends 183 days or more in China during a tax year is a tax resident. The tax year here matches the calendar year.

Residency determines scope rather than rate: more kinds of income fall within the Chinese tax authority’s view for a resident than for a non-resident, who is largely answerable for China-sourced income.

After that come the exceptions and provisos — they depend on how many consecutive years you have lived in the country, on the type of income and on the double-taxation treaty between China and your own country. This is a case where the general rule is worth knowing but the decision has to be made on your own facts.

How tax on your salary is paid

Income tax on your salary is withheld and remitted by the employer — what reaches you is already net. The scale is progressive: the higher the income, the higher the rate on its upper band.

There is a tax-free threshold and standard deductions — for children, education, housing rent, medical treatment and supporting parents. Some are claimed through your employer, others by you.

Foreign employees have historically had special rules on certain benefits — housing rent, children’s schooling, home leave. This regime has been changed and extended more than once; check its current status separately.

The annual reconciliation is a separate procedure: the year may end in an extra payment or a refund. It is done in the tax service’s app.

Social insurance

As a general rule foreign employees take part in China’s social insurance system on the same footing as locals: pension, medical, unemployment, work injury and maternity. Both the employer and the employee contribute.

China has agreements with a number of countries exempting you from some contributions so you do not pay twice. The exemption has to be documented; it does not apply by itself.

Medical insurance is the most practically useful part: it noticeably reduces the cost of treatment at public hospitals.

Pension contributions can in some cases be refunded when you leave the country. There is a separate procedure, and it is easier to deal with before you go than afterwards.