China to extend Tax breaks for foreign workers

CHINA will extend preferential tax policies for foreign nationals working in the country through to the end of 2027, the finance ministry said yesterday, in a boon to foreign firms struggling to attract talent post-COVID.

The government proposed scrapping the provision of non-taxable allowances for foreign workers in 2022, but decided to extend the scheme on a review basis until the end of this year.

Foreign chambers of commerce and business organizations in China had been seeking urgent clarification on whether the government would further extend the policy that enables expatriates to benefit from taxable deductions on house rental, children’s education, language training and other costs.

“We believe that this will help to curtail outflows of qualified international talent, while also providing multinational companies with clarity on their talent strategy regarding the deployment of expatriate staff and structuring of their packages,” said Kiran Patel, senior director at the China-Britain Business Council.

“This announcement to extend the existing individual income tax regime is a genuine statement of commitment from the Chinese Government to the multinational companies operating here.”

The finance ministry Aug. 25 announced the extension of preferential tax policies for overseas talents working in the Guangdong-Hong Kong-Macao Greater Bay Area to Dec. 31, 2027 to support the area’s development.

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