Newsletter
INCOME TAX RULES FOR NON-PRC RESIDENTS
On 23 July 2004, the PRC State Administration of Taxation promulgated its Circular of the State Administration of Taxation on Certain Issues Regarding the Implementation of Tax Treaties and the Individual Income Tax Law with Regard to Individuals without Domicile in Chinese Ter-ritory. The Circular provides clarification on various points of taxation policy with regard to non-domiciled individuals.
When calculating the number of days spent in China by an individual with no PRC domicile in order to determine that individual's tax liability, in all cases the calculation should be based on the number of days the person was actually present in China. Any day on which an individual enters or leaves Chinese territory, including any day with multiple frontier crossings, counts as a full day spent in China. But when calculating the number of days worked in China by an individ-ual with no PRC domicile who is employed both inside and outside China, or is employed only by an organization located outside China, a day on which the person enters or leaves Chinese terri-tory counts as half a day worked in China.
The Circular also enumerates formulae for cal-culating the tax payable by different categories of individual taxpayer, and makes explicit pro-visions on various issues regarding the applica-tion of taxation agreements to the income of senior enterprise managers with no domicile in the PRC.