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Shaanxi Service Platform for Foreigners | Analysis of the key points of personal

Release time:2021-10-14    |    Number of views:

First come to familiarize yourself with relevant policies and regulations:


  1. According to Article 7 of the "Notice of the Ministry of Finance and the State Administration of Taxation on the Connection of Preferential Policies after the Amendment of the Individual Income Tax Law" (Caishui [2018] No. 164):


(1) During the period from January 1, 2019 to December 31, 2021, foreign individuals who meet the personal requirements of residents can choose to enjoy the special additional deduction of individual income tax, or they can choose to follow the "Policies on Individual Income Tax of the Ministry of Finance and the State Administration of Taxation" "Notice on Issues" (Caishui [1994] No. 20), "Notice of the State Administration of Taxation on Issues Concerning the Implementation of the Collection and Exemption of Individual Income Tax on Foreign Individuals Obtaining Subsidies" (Guo Shui Fa [1997] No. 54), and "Notice of the Ministry of Finance and the State Administration of Taxation on Foreign The Notice on Levy and Exemption of Individual Income Tax for Individuals Obtaining Housing and Other Subsidies in Hong Kong and Macau (Caishui [2004] No. 29) stipulates that they can enjoy preferential policies for tax exemption for subsidies such as housing subsidies, language training fees, and children's education fees, but not at the same time. Once a foreign individual chooses, it cannot be changed within a tax year.


   (2) From January 1, 2022, foreign individuals no longer enjoy the preferential tax exemption policies for housing subsidies, language training fees, and children’s education subsidies, and should enjoy special additional deductions as required.


  2. According to Article 2 of the "Notice of the Ministry of Finance and the State Administration of Taxation on Several Policy Issues concerning Individual Income Tax" (Caishui [1994] No. 20), the following income is temporarily exempt from individual income tax:


   (1) Housing subsidies, food subsidies, relocation expenses, and laundry expenses obtained by foreign individuals in non-cash or in the form of reimbursement.


   (2) Domestic and overseas business travel subsidies obtained by foreign individuals according to reasonable standards.


   (3) Fees for family visits, language training, children's education, etc. obtained by foreign individuals are considered reasonable after review and approval by the local tax authority.


  (8) Dividends and bonus income obtained by foreign individuals from foreign-invested enterprises.


  3. According to the "Notice of the State Administration of Taxation on the Implementation of the Collection and Exemption of Individual Income Tax on Foreign Individuals Obtaining Subsidies" (Guo Shui Fa [1997] No. 54):


1. Reasonable housing subsidies, food subsidies, and laundry expenses obtained by foreign individuals in non-cash or actual form of reimbursement are exempted from personal income tax. The taxpayer shall receive the above subsidies for the first time or the amount of the above subsidies and the month when the payment method changes. When the salary and salary income tax declaration is made in the following month, the effective certificate of the above subsidy shall be provided to the competent tax authority, and the competent tax authority shall approve and confirm the tax exemption.


   2. Foreign individuals are exempted from personal income tax on relocation income obtained in the form of reimbursement due to employment or resignation in China. The taxpayer shall provide a valid certificate, which shall be reviewed and determined by the competent tax authority, and the reasonable part shall be exempted from tax. The monthly or regular expenses paid to foreign employees of foreign-invested enterprises and foreign enterprises' institutions and places in the same territory in the name of relocation expenses shall be included in wages and salaries and be subject to personal income tax.


3. The domestic and overseas business travel subsidies obtained by foreign individuals according to reasonable standards are exempt from personal income tax. The taxpayer shall provide the travel expenses and accommodation expenses vouchers (copy) or the relevant plans of the enterprise to arrange the business travel, which shall be confirmed by the competent tax authority duty free.


4. The family visit fees obtained by foreign individuals are exempted from individual income tax, and the taxpayer shall provide the travel expenses certificate (copy) for family visits, which shall be reviewed by the competent tax authority and used for family visits, and the number of visits and payment each year The reasonable part of the standard is granted tax exemption.


5. The language training fees and child education subsidies obtained by foreign individuals shall be exempted from individual income tax. The taxpayer shall provide the expenditure vouchers and time limit certification materials for receiving the above-mentioned education in China, and shall be reviewed by the competent tax authority. Language training fees and child education subsidies obtained by receiving language training and children’s education in China, and the portion within a reasonable amount is exempt from taxation.


  4. According to the "Notice of the Ministry of Finance and the State Administration of Taxation on the Levy and Exemption of Individual Income Tax on Foreign Individuals Obtaining Housing and Other Subsidies in Hong Kong and Macau" (Caishui [2004] No. 29):


1. Foreign individuals (not including Hong Kong and Macau resident individuals) employed by domestic enterprises in China who live in Hong Kong or Macau due to family reasons, and travel between the mainland and Hong Kong, Macau and other regions every working day, thus domestic enterprises (including Its affiliates) grant subsidies in the form of non-cash or reimbursement for housing, food, laundry, relocation, etc. in Hong Kong or Macau. If valid certificates can be provided, after verification and confirmation by the competent tax authority, the Article 2 of the Circular on Several Policy Issues Concerning Individual Income Tax [(94) Caishui Zi No. 020] and the “Notice of the State Administration of Taxation on Issues Concerning the Implementation of the Collection and Exemption of Individual Income Tax on Foreign Individuals Obtaining Subsidies” (Guo Shui Fa [1997] 54 No.) Articles 1 and 2 are exempt from personal income tax.


2. For the foreign individuals mentioned in Article 1 for their language training and children’s education in Hong Kong or Macau, if they can provide valid expenditure vouchers and other materials, the part that has been verified by the competent tax authority as reasonable, may be based on The above (94) Caishuizi No. 020 Notice Article 2 and Guoshuifa [1997] No. 54 Notice Article 5 are exempt from personal income tax.


  5. According to Article 14 of the "Notice of the State Administration of Taxation on the Cancellation and Decentralization of Certain Tax Administrative Approval Items for Foreign-invested Enterprises, Foreign Enterprises and Foreign Individuals" (Guo Shui Fa [2004] No. 80) Article 14:


According to Article 2 of the "Notice of the Ministry of Finance and the State Administration of Taxation on Several Policy Issues concerning Individual Income Tax" (Caishui Zi [1994] No. 020), the "Notice of the State Administration of Taxation on Issues Concerning the Implementation of the Collection and Exemption of Individual Income Tax on Foreign Individuals Obtaining Subsidies" ( According to the provisions of Guoshuifa [1997] No. 54), the housing subsidy, food subsidy, laundry fee, relocation fee, travel subsidy, family visit fee, language training fee, children's education fee and other subsidies obtained by foreign individuals in the form of non-cash or actual reimbursement shall be paid by Taxpayers provide relevant vouchers, and they will be exempted from personal income tax after the competent tax authority approves them. After the aforesaid approval is cancelled, foreign individuals who obtain the above-mentioned subsidy income shall provide relevant valid vouchers and supporting materials in accordance with the provisions of Guoshuifa [1997] No. 54 when they declare and pay or withhold personal income tax on their behalf. The competent tax authority shall, in accordance with the requirements of Guo Shui Fa [1997] No. 54, review the relevant subsidy income declared by the taxpayer or the withholding agent on a case-by-case basis. If the relevant vouchers and supporting materials cannot prove the rationality of the above-mentioned tax exemption subsidies, the competent tax authority shall require the taxpayer or the withholding agent to provide new supporting materials within a limited time. For the subsidy income that fails to provide valid vouchers and supporting materials, the competent tax authority has the right to make tax adjustments.


6. According to the "Notice of the State Administration of Taxation on the Implementation Standards Concerning the Exemption of Personal Income Tax on Family Visit Fees Obtained by Foreign Individuals" (Guo Shui Han [2001] No. 336): 1. Visiting relatives who can enjoy the preferential treatment of personal income tax exemption The fee is limited to the cost of taking the transportation between the foreign individual’s place of employment in my country and the place of his family (including the place of residence of his spouse or parents) and not more than twice a year.


  According to the above policy, it can be seen that in order to ensure tax fairness internally and externally, and avoid double enjoyment of preferential treatment, the following issues need to be paid attention to for the personal tax policy of foreign individuals:


(1) During the transition period from January 1, 2019 to December 31, 2021, foreign residents can choose to enjoy special additional deductions or the current housing subsidies, language training fees, children’s education fees, family visit fees, and meals in accordance with regulations. There are eight subsidy tax exemption policies, but the two preferential policies cannot be enjoyed at the same time. You can only choose one of the two: you can choose the original eight subsidy tax exemption policies, or you can choose the new policy to enjoy special additional deductions; (2) from 2022 From January 1, 2009, the policy clarifies that foreign individuals can no longer enjoy housing subsidies, language training fees, and children’s education subsidies, but can only choose to enjoy special additional deductions.


(3) Among the above eight subsidy incomes for foreign individuals, only three subsidies including housing subsidies, language training fees, and children’s education fees are included, and the current policy’s six special additional deductions for children’s education, continuing education, and housing loan interest The four items of housing rent correspond to each other (the remaining two items are "medical treatment for serious illness" and "support for the elderly"). Others such as: "food subsidies, relocation fees, laundry fees, domestic and overseas travel subsidies, and family visit fees obtained according to reasonable standards" and other five items, which do not overlap with special additional deductions. The transition period is over. If there is no clear new policy, It is still implemented according to the original policy and can enjoy the temporary exemption of individual tax;


  (4) Foreign individuals can enjoy a temporary exemption of individual tax on their income from “dividends” obtained from foreign-invested enterprises.


  (5) There are strict regulations and restrictions for foreign individuals to enjoy the above tax preferences, and they need to enjoy them in accordance with the regulations.


In summary, it can be seen that after the promulgation of the new personal income tax law, according to the current tax law, foreign individuals can enjoy housing subsidies, food subsidies, relocation fees, laundry fees, subsidies for domestic and overseas business trips, family visit fees, language training fees and Children’s education fees can be exempted from paying personal income tax for eight subsidies and tax incentives. In addition, they can enjoy the preferential policy of exemption of individual tax on dividends and bonus income from foreign-invested enterprises! In practice, it is necessary to focus on foreign individuals enjoying the above nine taxes. The scope of application, method of application, implementation standard, form of issuance, receipt of bills, and evidence of the discount are in compliance with the current policies and regulations, and whether there is any non-compliant operation method. The following list shows the nine specific audit points of fees for your reference:


  1. Applicable method: Focus on whether to choose the applicable preferential method during the transition period of the policy is the "original policy (eight subsidy preferences" or the new policy (special additional deduction)".


  2. Form of payment: Whether the subsidy is obtained in a "non-cash form" or a "reimbursement form". If the enterprise adopts other forms, it will not be able to enjoy the above eight tax preferences and should be incorporated into the current month's salary income and pay individual income tax.


  3. Scope of application:


(1) As for the housing subsidy, it must be actually used by the person. In addition to the rent of the house, other expenses such as: property fees, utilities, broadband fees, cable TV fees, cleaning fees, safe rental fees and other additional expenses Cannot enjoy tax exemption provisions as housing subsidies, and long-term hotel rental and "accommodation" invoices should not enjoy tax exemption provisions.


   (2) For food subsidies, pay attention to whether the method, quantity or amount of food subsidies exceeds common sense.


  (3) For the relocation fee, the relocation fee can enjoy tax-free relocation, which should be the relocation expenses incurred by the entry or exit of foreign employees. The "freight forwarding fee" incurred during the relocation cannot be tax-exempted.


   (4) For family visit expenses, it is necessary to verify whether the reimbursement bill is an air ticket (or other transportation bill), and non-transport reimbursement bills cannot be exempted from tax. Check whether the number of family visits exceeds twice a year, and whether the place of family visits matches your nationality and family residence, etc. If the destination of the plane is inconsistent with the place of nationality, it is required to provide explanations and other materials to provide supporting evidence.


  (5) For language training fees, the main concern is whether the nature of the reimbursement fee is actually used for language training. If it is a non-language training fee, it cannot be tax-exempted.


  (6) For children’s education expenses, they shall be academic education and kindergarten education approved by the education authority. Similar interest classes, early education classes, vocational skills training and other education are not within the scope of tax exemption. Non-education expenses incurred in schools are also not within the scope of tax exemption, such as meal fees, school bus fees, application fees, registration fees, examination fees, training class fees, tuition class fees, interest class fees, early education class fees, etc. In addition, children’s education expenses incurred outside of mainland China are not tax-exempt.


(7) Whether the nature of income is deliberately changed, there is a deliberate split of "salary income" income, which is transformed into "dividends, bonuses" income. Enjoy "dividends and bonus incomes obtained by foreign individuals from foreign-invested enterprises" temporarily exempted from individual tax The "black box operation".


  (8) Invoices, such as invoices, need to pay attention to whether the invoice is issued in compliance with regulations, whether it is a reimbursement certificate for the corresponding event expenditure, and whether there is a phenomenon of "fake invoices" false invoices to evade tax.


  3. It is necessary to check whether the following evidence materials are complete, true, reasonable and legal


   (1) Copies of labor contracts, dispatch certificates, etc. signed by the relevant enterprises and foreign individuals working in China, and copies of passports, work permits, etc.


  (2) A copy of the foreign employee’s house rental contract and corporate management regulations; if necessary, the house rental contract, rental invoice, bank transfer records and other relevant supporting materials.


   (3) Relocation expenses need to provide proof of employment, proof of resignation, passport, personal air ticket or electronic itinerary ticket, baggage "freight" invoice, etc.


   (4) Children’s education does not need to provide the "tuition" invoices, expense details and other relevant supporting materials issued by the school.


   (5) For language training fees, invoices issued by the training organization, detailed fee details, bank transfer certificates, contracts and other materials must be provided.


  (6) Salary schedule for foreign employees;


  (7) Copies of agreements, regulations or notices for children's education fees, etc.;


  (8) Wages and subsidy payment management system of the enterprise, etc.

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