IIT Subsidy Application in the Greater Bay Area: FAQs for 2021
A talent policy for the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) has enabled eligible overseas talents working in any of the nine cities in Guangdong province to apply for individual income tax (IIT) subsidies, from the start of 2019 to the end of 2023. During the period from July 1 to September 30, 2021, all nine cities successively opened and closed their IIT subsidy application process. Successful applicants will get subsidies equal to the portion of the IIT paid in the GBA city in excess of 15 percent of the taxpayer’s taxable income for 2020. This article lists some commonly asked questions about the IIT subsidy application process, updated for 2021, and provides answers based on our on-the-ground experience.
As of the end of September 2021, nine cities in Guangdong province – Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen, and Zhaoqing – have completed accepting applications from overseas ‘high-end’ and ‘urgently-needed’ talent to secure individual income tax (IIT) subsidies for the year 2020.
Dezan Shira & Associates’ Greater Bay Area offices have been providing advisory services regarding this policy and assisting talents and their employers in preparing the requisite materials, submitting applications, and coordinating with local government departments.
As this incentive will remain in effect for the next three years — the IIT subsidy applications for the year 2023 will be submitted in 2024 — 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. As the detailed rules might be slightly different from city to city, below we take Shenzhen as an example to demonstrate.
Q1: I am a foreign national and have been working in Shenzhen since the end of 2018. If I missed my IIT subsidy application for the year 2020, can I apply next year?
According to the current policy, taxpayers will not get a second chance to apply for the IIT subsidy if they missed the application deadline. Eligible expatriates are advised to apply for the IIT subsidy before the deadline as stipulated in each GBA city’s government announcement.
Q2: Is there any difference between the GBA IIT subsidy application for the year 2019 and 2020 in Shenzhen?
There are quite a few differences. While handling the GBA IIT subsidy application for the year 2020, we found that the government review is stricter than the previous year — the applicants were asked to supplement various documents to prove their eligibility.
Besides, the government has begun paying more attention to the social insurance contributions of the applicants. Though social insurance participation in 2020 is not a mandatory requirement for the GBA IIT subsidy application for the year 2020, applicants who hadn’t participated in social insurance schemes must begin participating immediately before they can proceed with the application.
Another noteworthy change is that there is no request for applicants’ taxable income (exceeding RMB 500,000) anymore. This enables more expats to access the benefits brought by this policy.
Q3: What should I pay attention to for next year’s GBA IIT subsidy application in Shenzhen?
First, applicants must submit the application before the application deadline of the corresponding GBA city, which is usually stipulated in the government announcement on the GBA IIT subsidy application for the year.
Secondly, as we have gleaned from this year’s application and our communication with authorities in charge, the requirement on social insurance enrollment and contribution is likely to become stricter for future GBA IIT subsidy applications. We suggest expats who intend to apply for the GBA IIT subsidy in the following years to participate and contribute to social insurance as required by law, in case the government makes this mandatory in order to qualify for the application.
Last but not least, please make sure that the personal information input into the tax system is completely consistent with other records that are involved in the application procedure, such as the data from the bank and the local social insurance bureau. We have come across a case where the application was hindered because the name registered with the bank was formatted in a different order from the name registered in the tax system. Although the problem was resolved in this instance, we suggest applicants pay attention to the accuracy of the information in advance considering the application time is limited.
Q4: I am a Hong Kong citizen living in Shenzhen. Are there any special changes for me to the GBA IIT subsidy application process for the year 2020?
The GBA governments classify talents into two categories: ‘urgently needed talent’ and ‘high-end talent’.
For Hong Kong citizens who want to apply as ‘urgently needed talent’, a big change is that the applicants have to be employed by ‘qualified companies in order to be eligible. ‘Qualified companies’ are those that are included in lists provided by different government departments. Those who are qualified as ‘high-end talent’ are not affected by this new change. Being a ‘High-end talent’ means that either you possess a qualified talent card, you are a candidate of qualified talent projects, or you are recognized by the state, provincial, or municipal government
Q5: Can I use my overseas bank account to receive the GBA IIT subsidy from the government or do I need to open a Chinese bank account?
Only a Chinese bank account is able to receive the subsidy from the Chinese government. Please also make sure that the beneficiary’s name on the bank account is the same as the taxpayer’s name registered with the tax bureau.
Dezan Shira & Associates will keep you updated on the most recent news on GBA IIT subsidy policies. We have an experienced team of tax accountants, lawyers, and ex-tax officials based in the GBA who can help with matters related to foreigners’ IIT calculation and subsidy application, as well as derive practical solutions to your human resource arrangement needs in the GBA. Please feel free to 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.
Dezan Shira & Associates has offices in Vietnam, Indonesia, Singapore, United States, Germany, Italy, India, and Russia, in addition to our trade research facilities along the Belt & Road Initiative. We also have partner firms assisting foreign investors in The Philippines, Malaysia, Thailand, Bangladesh.
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