China's Ministry of Finance and the State Administration of Taxation have announced the extension of the personal income tax policy on subsidies for foreign individuals, with the aim to lighten the tax burden on taxpayers.
It provides foreign individuals who meet the conditions for tax residents (which refers to individuals who have domicile in China, or though without domicile but have resided for more than 183 days in total in China) with the option to choose between two tax benefits.
Under the provisions, eligible foreign individuals can choose to enjoy the special additional deduction for personal income tax or follow the previous regulations to enjoy tax exemption benefits for housing subsidies, language training fees, children's education expenses, and other subsidies.
However, they cannot enjoy both benefits simultaneously, and once a choice is made, it cannot be changed within one tax year.
This new announcement will be implemented until December 31, 2027, providing a long-term framework for the personal income tax policy on subsidies for foreign individuals.
