Attention: Foreigners’ tax payments getting checked!!!

By Manuela Reintgen, ECOVIS Beijing China

Tax authorities have put a focus on foreigners’ Individual Income Tax (IIT) payments! Beijing tax officials are currently conducting random checks on past tax filings and forcing companies to make self-inspections.

These include not only the regular tax payments, but especially focus on the allowances, every foreign individual is entitled to enjoy tax-free.

As we have explained in various articles on IIT (Individual Income Tax – Part I and Part II) previously, allowances such as housing, language training (Chinese), children’s education etc. have to be proven by official Chinese tax invoices, the so called ‘Fapiaos’.

Often, the Fapiaos filed with the company do not satisfy legal requirements and sometimes they are even fake ones. If discovered by the authorities, taxes might need to be back-filed, late-payment interests might sum up to high amounts as accumulated for years and potential penalties for non-compliance might be imposed on the company. 

Further, the authorities are checking the costs born by the employer, such as overseas social insurance and commercial insurance for individuals and family members– they have to be declared as taxable income in China.

We can check whether your IIT calculation and Fapiao handling is done correctly. Contact us in order to get an experts’ opinion on your compliance right now!

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