Event on Individual Income Tax Policy and Employment of Foreigners

Sasha Chang

Sasha Chang is a junior associate. She holds a Juris Master degree from Shanghai International Studies University. She passed the China Bar examination in 2017. Before joining DaWo Law Firm, Sasha worked as a legal intern in a large multi-national investment company.

On October 15, 2021, DaWo Law Firm, together with Orbis, hosted another professional training session in its offices to discuss the new policy on individual income tax in China which is expected to be implemented as from January 1, 2022.

Maggie Jia (Head of our Employment and Compliance Practice), together with Eva Tian (senior tax consultant at Orbis), shared with the audience of about 50 HR managers, their knowledge and opinions regarding the implementation of the new regulation and its subsequent impact on companies and individuals, especially on foreigners currently working and living in China.

As a specialist in tax planning, Eva analyzed the policy in regard to the handling of the annual settlement of general income for individual income tax, not only from a legal perspective but also very much in practice. Her presentation dealt with several hot topics including the special additional deductions, reimbursement & invoices, taxation of annual one-off bonus etc. Also, Eva introduced a “Seven Steps Analysis” as a particularly effective method to understand the new taxation policy more clearly.

From her side Maggie discussed three cases taken from her practice pertaining to foreigners working in China and their concerns regarding employment and taxation. It is quite obvious that the new individual income tax policy will have serious impacts on the relationship between employees and employers in respect to salary, bonuses, benefits, etc. Maggie provided the HR Managers with very hands-on, suggestions on how to deal with these changes in employment relationships, the modifications it could imply on the existing employment contracts and how to efficiently deal with eventual discussions, disagreements or claims from the employees in this respect.

We strongly recommend that employers would anticipate on the new regulation coming into force and that they would initiate the discussions with their employees well ahead of the January 1 deadline in order to leave sufficient time to solve any questions or issues which may arise.

If you have any questions about the above topics, please do not hesitate to contact us.