By the end of August 2020, nine cities of Guangdong province – Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen, and Zhaoqing – have successively completed procedures for overseas ‘high-end’ and ‘urgently-needed’ talents to apply for the individual income tax (IIT) subsidies.
Dezan Shira & Associates’ GBA offices have been busy providing advisory services regarding this policy and assisting talents and their employers in material preparation, application, and coordination with local government departments.
As this incentive will remain in effect for the next four years (until the end of 2023), we would like to share some frequently asked questions and our comments, in a bid to help future applicants succeed in obtaining the IIT subsidies.
A: According to the implementation rule announced by the Guangzhou government with regards to the GBA IIT subsidy application, taxpayers holding the working permit grade A are entitled to apply for the subsidy. However, the working permit must be issued by the Guangzhou State Administration of Foreign Experts Affairs and it must be valid within 2019.
A: Since you have two sources of income from China in 2019, the first step is to complete the annual tax settlement by consolidating all China-sourced incomes and recalculate the tax amount on an annual basis. If the annual tax amount payable exceeds the accumulated monthly prepaid tax, you may need to make up the outstanding tax by June 30, 2020.
The second step is to calculate the estimated GBA IIT subsidy amount, which will be basically calculated based on two criteria – first, the portion of the paid IIT that exceeds the 15 percent of the taxable income in 2019; and second, the portion of the IIT paid to GBA cities’ tax bureaus (IIT paid to the Beijing tax bureau will be excluded).
A: Only a Chinese bank account is able to receive the subsidy from the Chinese government. Please also make sure that the beneficiary name of the bank account is the same as the taxpayer name registered with the tax bureau.
A: Yes. Considering the impact of the COVID-19 pandemic and restrictions on traveling to China, the taxpayer is allowed to make the application in 2021 for GBA IIT subsidy of 2019.
You are welcome to contact our GBA-based professionals for more information. We can help in the foreigners’ IIT calculation and subsidy application, as well as derive practical solutions to your human resource arrangement needs in the GBA. Please email us at China@dezshira.com.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at firstname.lastname@example.org.
We also maintain offices assisting foreign investors in Vietnam, Indonesia, Singapore, The Philippines, Malaysia, Thailand, United States, and Italy, in addition to our practices in India and Russia and our trade research facilities along the Belt & Road Initiative.
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