The PRC tax authority formally passed the amendment of the Personal Income Tax Law to introduce a new threshold (the threshold is not a tax allowance) and a tax rate with effect from October 31,2018. All Chinese citizens or Hong Kong people who have stayed in China for more than 183 days are required to pay personal income tax in China on 31 August 2018.
The allowance for personal income tax in China is 60,000 yuan per year (RMB 5,000 per month) and the personal income tax rate is 3% to 45%.
Taxable income = wages, salary income-basic deductions-other provisions deduction items
How can Hong Kong people be exempted from paying mainland personal income tax?
According to the "Double Taxation Agreement" entered between Hong Kong and the mainland tax authority in 2006, Hong Kong tax resdients will not be necessary if they meet the following 3 conditions:
Stay in the mainland for a continuous or cumulative period of not more than 183 days within 12 months
Income is not paid by mainland employers
Income is not paid by the Permanent Establishment of the employer based in the mainland
If any of the above conditions are not met, the income will be taxed in the mainland
If Hong Kong people become tax residents of Hong Kong and the mainland at the same time, how can the status of dual tax residency be resolved in order to avoid double taxation?
The "Double Taxation Agreement" adopts the OECD standard, according to which he has permanent residence on that side (for example, whether to purchase a property in the Great Bay Area?), he has a closer economic relationship with that party, he habitually resides on that side and the Inland Revenue Department of the two sides negotiate a settlement to determine that he belongs to that party.
How to calculate the number of days of a Hong Kong resident stays in the mainland?
The State Administration of Taxation and the Inland Revenue Department have reached a consensus that if the same day is between the two places and services are provided in both places, they will be calculated on a half- If services are provided to and from both places on the same day and only in the mainland, the stay is counted for 1 day.
Different treatment methods for director fee and staff salaries under the Double Taxation Agreement
Director fee adn employment salary have different tax treatment
Staff salaries will consider the number of days a employee stays in Hong Kong or the mainland and the location where they actually perform their duties
The director fee will only take into account the tax status of the company, and if the mainland company is a mainland tax resident, even if the Hong Kong person is a director and has been working in Hong Kong for a long time, the director is still required to pay Hong Kong tax.
How can I enjoy tax preferential treatment under the Double Taxation Agreement?
Anyone who wants to enjoy tax preferential treatment under the Double Taxation Agreement are required to submit an application for a Certificate of Tax Resident Status.
Since enterprises or individuals will enjoy a lot of tax concessions after becoming Hong Kong tax residents, 展群CK ® has also assisted many overseas enterprises in planning the tax structure for their groups in order to qualify as Hong Kong tax residents.
For further information, please contact 展群CK ®:
a. Phone at (852) 3502 7392
b. Whatsapp at (852) 5227 9242
c. Email at