Letter to the State Administration of Taxation (SAT) on the Cancellation of Non-Taxable Benefits per Individual Income Tax Law (IIT) Amendment

2019-07-10 | All chapters

The European Chamber has submitted a letter to the State Administration of Taxation with regards to the cancellation of non-taxable benefits as per amendments to the Individual Income Tax Law (IIT). The Human Resources and Finance and Taxation working groups raised concerns that the IIT amendment's regulation removing non-taxable benefits by 2021 will hamper foreign investment and the cross-border assignment of high-level foreign talent. Focusing particularly on children's tuition fees for international education, which under current regulations are non-taxable, the working groups note that the proposed IIT amendment will create a significantly higher tax liability that may make assignments in China financially unsound. The Chamber therefore suggests to maintain regulations in regard to reasonable non-taxable benefits for foreign employees in China beyond 2021.