Income Taxes for Expats in China

Wherever you live, you have to pay taxes. As an expat, you have to pay taxes both in your home and host country. 

This post will give you a complete overview of the expat taxes in China. Here I want to declare that I am not a tax professional, I just want to share my own experiences and practices. Don’t rely on the information I give you in this post. This is general info, for complete guidance, please consults a tax professional. However, for expats, it can be hard to find good guidance in China. 

US-expats living in China need to file a US tax return

If you are a US citizen, no matter how much time you live out of the country, you have to file a US tax return. 

For taxes back in your home country, make sure to keep a complete record of all days you spend out of the country, including the time of coming in and departure from your home country. You have to consider everything when tax time comes to figure out your citizenship and foreign earned income exclusion.

If you work in a Chinese company, you may not get a W-2. There is an official agreement between China and the US that covers the tax reporting. It seems in the future, you and the IRS may receive a W-2 from a Chinese company. 

China collects Income Tax

As an expat in China, you have to pay taxes on the income you earned there. If you spend more than 5-years in China, your total income will become a question to Chinese individual income tax. To avoid this you should leave China for more than 30 days, breaks up the full year, and start over the clock. 

China has an advanced tax system similar to the US. The tax rate increase with the earnings. The least amount is collected from income. 

If you work in a Chinese company, the company may hold back income taxes for you and issue an official statement at the end of the year about the tax you paid. This tax document is important when you want to transfer money out of China, so collect it. 

Proof you paid income taxes to transfer your money out of China

To move your money out of China, you need a tax document that proves you have paid all taxes in China. You will get an official tax statement at the end of the year. Use your tax statement on time, it can be expired. If you decide to transfer your money this year, you need the tax statement of last year.