Confirmed! Extended Tax Benefits for Foreigners' Allowances

On the 28th, China's Ministry of Finance and the State Taxation Administration announced the continuation of a series of individual income tax preferential policies, which will be in effect until the end of 2027.

1. Continuation of the personal income tax policy for ocean-going seafarers:

For ocean-going seafarers who sail for a cumulative total of 183 days within a tax year, 50% of their wage and salary income is deductible from the taxable income, and individual income tax is payable according to the law.

2. Continuation of the personal income tax policy related to allowances for foreign individuals:

Foreign individuals who meet the conditions of resident individuals may choose to enjoy special additional deductions for individual income tax, or they can enjoy tax exemptions for subsidies such as housing allowances, language training fees, and children's education expenses. Once foreign individuals make a choice, it cannot be changed within a tax year.

3. Continuation of the annual one-time bonus personal income tax policy:

Residents who receive an annual one-time bonus that meets the specifications of the "Notice on Adjusting the Method of Calculating and Collecting Individual Income Tax for Annual One-Time Bonuses" (National Tax [2005] No. 9) will not merge this income into the annual comprehensive income. Instead, the bonus income is divided by 12 months to determine the applicable tax rate and quick deduction, and tax is calculated separately using the formula: 

Tax payable = Annual one-time bonus income x Applicable tax rate - Quick deduction.

Residents can also choose to include the one-time bonus in their annual comprehensive income for tax calculation.

4. Continuation of the individual income tax policy for comprehensive income final settlement:

For the period from January 1, 2024, to December 31, 2027, for residents with an annual comprehensive income of no more than 120,000 yuan and who need to make a final settlement and pay additional tax, or if the annual final settlement and additional tax amount does not exceed 400 yuan, they can be exempted from the final settlement of individual income tax on comprehensive income. This does not include cases where the withholding agent failed to withhold and prepay the tax in accordance with the law.

Source: The Paper

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