You are a Tax Resident of PRC if either of the following criteria is satisfied:
- Individuals who domicile in P.R.China, Or
- Individuals who are physically present in P.R.China for aggregated 183 days or morein any given 12 months period (commencing or ending in the fiscal year concerned).
If employees are deemed to be tax resident, they will be liable to pay individual tax. And the non-resident company that perform the service is considered to have a permanent establishment in China. Income attributed to the business operation is taxable locally.
Tax losses can be used to offset income earned in subsequent years. In the absence of any income, the losses cannot be utilized. And the tax losses can only be carried forward for 5 years.
Tax deduction on expenses –
foreign nationals working in China
Under PRC individual icome tax law, there are tax exemption (or deduction ) on benefits such as international school fees and housing allowance, provided that these items are cludded in the employement contract. Make sure to obtain the fapiao (tax invoice) from the landlord and the school as the Tax Bureau will require the applicant to present the copy of employment contract as well as fapiaos.