General rules

i  Individuals with residence status in China (i.e. those individuals who live in China for family or economic reasons) or individuals without resident status who have lived in China for 1 year shall pay personal income taxes on all income from domestic and overseas sources.

ii Individuals who do not live in China PRC and without residence status in China, or those who have lived in China for less than 1 year and without residence status in China, shall pay personal income taxes for the income they have earned from within China.

Detailed taxable items and tax rates for personal income taxes are as follows.

For salaries there is a scale of tax ranging from 5% to 45%.

For incomes earned by individual industrial and commercial entities as well as the incomes earned from sub-contractual operation and chartering operations for enterprises and institutions the applicable tax rate is 5% to 35%;

For service industries, there is a three-tier rate of 20%, 30% and 40%;

For writers, their income is subject to a 20% proportional tax rate and a 30% deduction to the taxable amount, amounting to a real rate of 14%;

Royalty incomes, incomes earned from interest, dividends and bonuses,  property  lease  incomes,  property assignment incomes, occasional incomes and other incomes as defined by the finance sectors of the State Council to be taxable are taxed at a rate of 20%.

Main Preferential Terms for Tax Reduction/Exemption (Individual Income Tax)

 i Those who have no residence in China but have lived for more than I year or under 5 years,  after tax authority's permission,  must pay individual income tax for their income that has originated from domestic (within China) sources paid by  the  companies,  enterprises,  and  other  economic organizations, or individuals. As for those who have lived in China for over 5 years, from the sixth year, have to pay individual income tax for their all earnings from overseas sources.

ii Those who have no residence in China but continuously or accumulatively lived in China for less than 90 days within a tax year, shall be exempted from individual income tax on the earnings that has originated from domestic (within China) sources but paid by the overseas employer instead of the organization or places run by this employer within the boundary of China.

iii  Both those taxpayers, who have no residence in China but obtains wages and salaries granted by the organizations within the boundary of China, and those taxpayers, who have residence in China but obtains wages and salaries granted by the overseas organizations, additional deductible expense is allowed to be deducted when calculating taxable income, and the additional deductible expense is RMB3200 Yuan per month.

iv  The following income obtained by foreign individuals will be exempted from individual income tax for the time being:

         (1)house allowance, food allowance, allowances for relocation and allowances for washing obtained in noncash or being reimbursed for one's actual expense;
         (2)both  domestic  and  abroad  traveling  allowance obtained by rational standard;
         (3)approved by local tax authority as rational expense for visiting  family,  expense  for  language  training  and child-education expense;

v  Those foreign individuals, who obtain dividend from foreign  invested enterprises; as well as those foreign individuals, who hold B share and overseas share and obtains dividend from the domestic enterprises of china which issued the said B share or overseas share, will be exempted from individual income tax for the time being