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Foreign Employees’ Salary Tax Exemption in China

"Notice of the State Administration of Taxation of the Ministry of Finance on Several Policy Issues concerning Individual Income Tax" (Finance and Taxation Word (1994) No. 020). The document stipulates eight preferential policies for tax exemptions for foreign individuals, including below items,

1. Housing subsidies,

2. Meal subsidies,  

3. Laundry expenses,,

4. Relocation expense,

5. domestic and foreign business travel subsidies,

6. Family visit expense,

7. Language training fee ,

8. Children education fee. 

Specifically, the reimbursement of each item has the following requirements


  • And how much by item and/or in total you can get the amount of "Tax exemption"? From the practice view, we propose you apply for the tax exemption below 30% of your total monthly income. 

  • And from the process perspective, before 2004, you must follow the Application & Approval process to get the tax exemptions, which means your company's Tax Supervisor will give you the written approval then you can really get the tax exemption.

  • In year of 2004, policy of No. 16 and 80, issued from the National Tax Bureau, cancelled the process of Application & Approval, and companies HR could handle their foreign employees payroll under all related policies, just well keep all supporting documents. The Tax Bureau would do the Random Check/Audit from time to time.

From year of 2019, foreign individuals who meet the personal requirements of residents may choose to enjoy special additional deductions of individual income tax. You can also choose to follow the above Notice (Finance and Taxation [1994] No. 20), the preferential policies of 8 items of tax exemption, but may not enjoy them at the same time. Once selected, the foreign individual cannot change it within one tax year. The execution period is extended to December 31, 2027.

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