Foreigners living in the southern Chinese city of Guangzhou will soon be exempt from some of their personal income taxes in line with a document released by China's Ministry of Finance and the State Administration of Taxation, according to news from the local tax authorities.
According to a circular jointly issued by the Ministry of Finance and the State Administration of Taxation, expatriates working on China's mainland but dwelling in Hong Kong and Macao (except that they are permanent residents of the two regions), who have to commute between home and office every working day, will be exempt from taxes for allowances on residence, food, cloth washing, relocation and other non-cash subsidies after producing a valid warrant and receiving investigation by relevant tax authorities. In addition, foreign employees are granted tax exemptions for allowance on language training and children's education in Hong Kong and Macao.
Meanwhile, expatriates will be tentatively freed from paying taxes for: Personal home and overseas traveling allowance, family visit allowance as well as bonus and interest paid by foreign investment companies.
Circular sets deadline for paying overdue taxes
In a circular issued recently, China's State Administration of Taxation stipulates that foreigners living on China's mainland will receive amnesty from fines if they pay tax on under-reported income by the end of June.
According to China's ministry of Labor and Social Security, foreigners in China have exceeded 50,000 by the end of 2002, and their average annual income is 176,000 yuan (US$21,250). They have to pay personal income taxes for the part of their monthly salary that surpasses 4,000 yuan. Owing to foreigners' tax dodging and evasion, China each year suffers a loss of 10 billion yuan.
The amnesty encourages foreigners to solve past delinquent problems and pave the way for a better environment for taxpayers to comply with Chinese tax laws in the future, taxation officers said.
According to the circular, foreigners will only be charged a 0.05 percent fine on any overdue taxes if it's paid before the above-mentioned deadline. Outstanding taxes paid after June may result in fines of up to five times of the tax liability.
(China.org.cn by Li Xiao, June 11, 2004)
