China Individual Income Tax for Foreigners: Residency Rules and Expat Planning

Resident or non-resident: the 183-day line

The Individual Income Tax Law (as amended in 2018 and effective January 1, 2019, with its Implementing Regulations, State Council Order No. 707) splits individuals into two camps. A resident individual has a domicile in China, or has no domicile but stays in China for a cumulative 183 days or more in a tax year, and is taxed on worldwide income. A non-resident — no domicile and fewer than 183 days — is taxed only on China-source income. For a foreign national posted to China, that single line decides whether foreign investment income and foreign salary enter the Chinese tax base at all.

How China counts your days

The day-counting rules are set by Announcement No. 34 of 2019 of the Ministry of Finance and the State Taxation Administration. Only a full 24-hour day in China counts as a residence day; the day of entry and the day of exit generally do not count. The practical effect is that frequent short trips keep many expats below the 183-day line — and inside the first-five-year exemption zone described below — for longer than their calendars suggest. Track the days precisely, because the rule is both a trap and an opportunity.

The six-year rule and the 90-day rule

Two further rules soften the regime for non-domiciled individuals. Under Article 4 of the Implementing Regulations — the six-year rule — a non-domiciled individual whose consecutive years of 183-day-plus residence number fewer than six is exempt (subject to filing requirements) on foreign-sourced income paid by foreign entities. Once six consecutive qualifying years are reached, that foreign income becomes taxable from the sixth year onward, and a single trip abroad exceeding 30 days in a calendar year resets the consecutive-year count. The count runs from 2019 onward. Under Article 5 — the 90-day rule — a non-domiciled individual staying 90 days or fewer in a tax year is exempt on China-source income paid by an overseas employer and not borne by the employer's establishment in China. The precise year in which the six-year threshold first bites for a given expat depends on the official interpretation of the counting rules, so confirm your individual position with the tax authorities or a qualified adviser rather than relying on a generic example.

Rates, deductions and annual settlement

Residents are taxed on comprehensive income — wages and salaries, labour remuneration, author's remuneration and royalties — at progressive rates from 3% to 45% across seven brackets, with the top rate applying to annual taxable income above 960,000 yuan. The basic deduction is 5,000 yuan per month (60,000 yuan a year). Resident individuals settle comprehensive-income tax in an annual reconciliation (汇算清缴) between March 1 and June 30 of the following year; non-residents are taxed monthly and generally do not perform the annual comprehensive-income reconciliation. The exact bracket thresholds and quick-calculation deductions should be taken from the current official annual-reconciliation table.

Special additional deductions

There are seven special additional deductions (专项附加扣除): children's education, continuing education, serious-illness medical expenses, housing loan interest, housing rent, support for the elderly, and care of infants under three. State Council Notice Guo Fa [2023] No. 13 raised several amounts from January 1, 2023 — children's education and care of infants under three each rose to 2,000 yuan per child per month, and support for the elderly rose to 3,000 yuan per month (only-child standard). The full current table, including the other items, is subject to the latest official rules.

The foreigner's choice: deductions or tax-exempt allowances

A foreign national who qualifies as a resident may choose, for each tax year, between the standard special additional deductions and the older tax-exempt allowance route — housing allowance, language-training fees and children's education fees under the earlier tax circulars — but not both, and the choice is locked for the tax year. This election is currently governed by Announcement No. 29 of 2023, which extends the allowance option through December 31, 2027. For a high-rent expat, the housing allowance is often the larger benefit, so run the numbers before electing rather than defaulting to the deductions everyone else uses.

Tax treaties and planning

China's tax treaties can override domestic rules — different "183 days in any 12-month period" tests, and tie-breaker rules for dual residents — so the specific treaty between China and the individual's home country must be checked before any conclusion. The classic planning levers remain: keep day counts documented, use a single trip exceeding 30 days to reset the six-year clock when it matters, and make the deduction-versus-allowance election deliberately rather than by default. Because these rules are technical and periodically adjusted, confirm the operative versions on the State Taxation Administration and Ministry of Finance policy libraries before relying on them. Foreign nationals with China income often face parallel planning questions around buying property in China, which our team advises on alongside tax matters.