In short: yes. If you are a foreign national who spends 183 days or more in China in a calendar year, you are a Chinese tax resident and must pay Chinese individual income tax (IIT) on your worldwide income. If you stay fewer than 183 days, you are a non-resident and only pay tax on income sourced in China.

What the law says: the 183-day rule

Article 1 of the Individual Income Tax Law of the People’s Republic of China provides that a person who is domiciled in China, or who has no domicile but resides in China for a cumulative 183 days in a tax year, is a resident individual. A resident is taxed on income obtained from both inside and outside China. A non-resident, meaning someone with no domicile who stays fewer than 183 days, is taxed only on China-sourced income, such as salary for work actually performed in China.

The six-year rule: the exemption many expatriates overlook

Being a resident does not automatically mean your overseas income is taxed. Under Announcement No. 34 of 2019 issued by the Ministry of Finance and the State Taxation Administration, a non-domiciled individual who has been resident for 183 days or more for fewer than six consecutive years may, after filing a record with the competent tax authority, be exempt from IIT on income sourced outside China and paid by an overseas entity or individual. A single absence from China of more than 30 days in a year breaks the chain and resets the count.

What this means in practice

Your employer withholds IIT monthly. If you are a resident, you also complete an annual reconciliation, usually between 1 March and 30 June of the following year. Article 6 allows a basic deduction of RMB 60,000 per year, plus special additional deductions for children’s education, housing, elderly care and more. Comprehensive income is taxed at progressive rates from 3% to 45%. China has double-tax treaties with more than 100 countries: if the same income is taxed at home, you may claim relief, and you may need a China tax residency certificate to prove your status to a foreign tax authority.

Example (hypothetical): a foreign engineer works in Shanghai from January to October, about 210 days, then leaves for good in November. Because she is resident for that year, but has been resident for fewer than six consecutive years and is absent for more than 30 days, her foreign salary paid abroad can be exempt if she files the required record. If she had kept the same pattern for six straight years, that protection would disappear.

If your plans involve long stays in China, confirm your residency position early: the difference between resident and non-resident status can be tens of thousands of RMB a year.

FAQ

Q: Do foreigners have to pay tax in China?

A: Yes, if you spend 183 days or more in China in a calendar year. Under Article 1 of the Individual Income Tax Law, a person who is domiciled in China, or who has no domicile but resides in China for a cumulative 183 days in a tax year, is a resident individual taxed on income obtained from both inside and outside China.

Q: What if I stay fewer than 183 days?

A: You are a non-resident and are taxed only on China-sourced income, such as salary for work actually performed in China.

Q: What is the six-year rule?

A: Under Announcement No. 34 of 2019, a non-domiciled individual who has been resident for 183 days or more for fewer than six consecutive years may, after filing a record with the competent tax authority, be exempt from individual income tax on income sourced outside China and paid by an overseas entity or individual. A single absence from China of more than 30 days in a year breaks the chain and resets the count.

Q: What deductions and rates apply?

A: Article 6 allows a basic deduction of RMB 60,000 per year, plus special additional deductions for children’s education, housing, elderly care and more. Comprehensive income is taxed at progressive rates from 3% to 45%.

Q: Do I have to file an annual reconciliation?

A: Yes, if you are a resident. Your employer withholds individual income tax monthly, and you also complete an annual reconciliation, usually between 1 March and 30 June of the following year.

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Wang Guan | Co-founder, Beijing Haolue Law Firm | +86 17813108512