Countdown! These Tax Incentives Will Be Canceled by 31 Dec 2021!
Countdown! These Tax Incentives Will Be Canceled by 31 Dec 2021!
In this article, we will explain a couple of tax incentives policies, which will expire by 31 December 2021.
And here are our previous articles about tax, hope can help you as well!
01
VAT for small-scale taxpayers increases from 1% to 3%
New Changes
From 1 Jan 2022, VAT for small-scale taxpayers will increase from 1% to 3%.
The universal benefit of the levy-free concession remains.
Previous Policy
Because of the epidemic, from 1 Apr 2021 to 31 Dec 2021, VAT small-scale taxpayers subject to tax sales rates with a levy rate of 3% shall pay tax with a levy rate of 1%, and VAT small-scale taxpayers subject to a 3% prepayment rate shall pre-pay 1%.
*This policy will expire by 31 Dec 2021
Source: State Taxation Administration of the People's Republic of China
02
Foreigners are no longer eligible for any tax exemption on housing allowances, language training fees and child education allowances
New Changes
From 1 Jan 2022, foreign individuals will no longer be entitled to the preferential tax exemption for housing allowance, language training fee and children's education fee allowance. They are still entitled to special additional deductions in accordance with the regulations.
Previous Policy
Foreign residents in China, from 1 Jan 2019 to 31 Dec 2021, can enjoy special additional deductions for personal income tax purposes or enjoy one tax exemption for allowances like housing allowances, language training fees, or children's education fees in accordance with the regulations (they can not choose all).
Once an individual has chosen their exemption, they cannot change it within 1 tax year.
You can scan this QR code for the official policy from the Ministry of Finance of the People's Republic of China.
财税〔2018〕164号文件
Source: Ministry of Finance of the People's Republic of China
03
How your type of residence permit affect your tax payment?
Type A residence permit for work
If you hold a type A residence permit, your annual salary income (before tax) should exceed RMB600,000 and have paid an annual individual income tax of over RMB120,000(take policy in Shanghai as an example).
Here's a sample from our clients
PR application for working staff
If you want to apply for a permanent residence card for working staff, you should provide certification of annual individual income tax exceeding RMB120,000 for 4 consecutive years(take policy in Shanghai as an example).
Here's a sample from our clients
Type B work residence permits for foreign investors
If you invest and own a company, when extending your type B work permit, you need to provide a quarterly billing of 90,000 RMB at least.
Proof of the company's normal operations generally includes:
Fapiaos for business transactions
Company bank account
Proof of hiring Chinese employees
A commitment sample that states they will provide social insurance forms of Chinese employees and tax payments to prove the company's operations.
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