With the rapid development of the economy and international influence, China is attracting more and more foreigners to invest, work and live, to be able to stay in China indefinitely and enjoy the same benefits as Chinese citizens, foreigners usually choose to apply for permanent residence in China according to their circumstances. However, there are also some problems after having Chinese permanent residence status, such as after obtaining permanent residence status, in which situation should foreigners pay tax? Does a foreigner who holds a green card have an impact on tax status? This article will solve your doubts.
Resident: A resident refers to any individual who has a residence within the territory of China or who has no residence but has stayed within the territory of China for totally 183 days or longer in a single tax year.
Non-resident: A non-resident refers to any individual who has no residence and does not stay within the territory of China or who has no residence but has stayed within the territory of China for totally less than 183 days in a single tax year.
The term “residence” in tax laws is a special concept, not equivalent to a house in the real sense. An individual who has a residence within the territory of China refers to anyone who has a habitual residence within the territory of China on account of household registration, family ties and economic interests. Habitual residence is a legal criterion to determine whether a taxpayer is a resident or non-resident. It does not refer to an actual residence or a residence at a particular period. If an individual resides abroad for study, work, family visit, travel, etc., and then returns to reside in China, his/her habitual residence shall be China, that is, the individual has a residence within the territory of China.
Therefore, when solving the tax problem of foreigners, it is necessary to determine whether they are residents or non-residents in a tax year (a tax year in China is a natural year), and then calculate how they should pay tax. According to the Individual Income Tax Law, the law divides non-residents who live in China for 183 days in a year into two categories.
Non-resident classification
- A person who has no permanent domicile in China but has resided in China for a total of 183 days in a tax year and not left the country for more than 30 days in any of the previous six years, shall pay individual income tax originating both within and outside China in that tax year.
- A person who has no permanent domicile in China, if the total number of days of residence in China in any of the previous six years is less than 183 days or if the single departure exceeds 30 days, the income originated outside of China and paid by units or individuals outside of China in that tax year is exempt from individual income tax.
The following figure is the table of personal income tax liability for reference:
How to maintain Green Card Status in China?
1.You must stay in China for a period, at least 3 months per year.
2.The validity period of the Green Card is ten years. After the validity period expires, you need to apply to the Immigration Bureau for a new card. The validity period of the Green Card for minors is five years.
3.Must comply with Chinese laws.
Therefore, to maintain your permanent residence status in China, you only need to live in China for at least 90 days per year. Obtaining permanent residence does not require you to have a residence in China or live in China for 183 days in 6 consecutive years. If you have obtained a Chinese green card, the tax payment is mainly divided into the following three categories according to your residence time in China:
1) When living for 90 days but less than 183 days, all domestic income must be taxed, and foreign income is not required to pay tax.
2) When the residence period exceeds 183 days but less than 6 years, all domestic income must be taxed, the domestic unit part of the overseas income is subject to tax, and the overseas unit part is not required to pay tax.
3) If a person has lived in China for 183 consecutive days in a year for 6 consecutive years and has not left the country for more than 30 days in a single year, he must pay tax on all domestic income and overseas income.
Whether you must pay taxes on income earned from overseas depends on whether you have a domicile in China and how long you have lived in China. Therefore, the foreign person’s application for a green card has no impact on the tax status, and the factors that affect the tax status are whether they have lived in China for 183 days and whether they have a fixed residence in China.