New IIT systems for expatriates come online in Shenzhen

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By Eugenia Wu/Dezan Shira & Associates

SHENZHEN, Sept.28 -The Shenzhen tax bureau has changed its IIT declaration systems for companies with high payments. The two new systems – IIT withholding and Yi Cai Shui (easy tax) – came into effect in July, 2007.

The Yi Cai Shui system transmits data from IIT withholding to the local tax bureau. The IIT withholding system holds all personal information separately for local and expatriate staff. Different from the old system, staff ID number will be verified by the IIT withholding system. Any incorrect combination of the digits will be blocked from the transfer. In addition to a staff ID number, the locality of the staff member’s hukou must be provided.

For expatriates, the tax bureau has increased its requirements on IIT declarations. Instead of only a passport number and salary consideration under the old system; now the place and date of birth, nationality, and mailing address of origin are all required. Expatriates with positions not only in China but also abroad will need to list the details of employment respectively. Moreover, the location of payments, the date of entering the Chinese mainland for the first time, duration of the local employment contract, and the anticipated length of stay in China and anticipated date of departure need to be declared. The number of days in China within a given month is necessary and relevant for the new IIT formula calculations.

For more information about individual income taxes for expatriates, please see the January/February issue of China Briefing.

For business advisory services, assistance establishing, structuring or operating a business and contract drafting in Shenzhen, please contact Alberto Vettoretti in the Shenzhen office of Dezan Shira & Associates at, tel. [755] 8366 4120.