Revised: New Chinese Income Tax Rules for Foreign Nationals
China has rolled out an updated tax policy impacting foreign individuals residing within its territory.
On September 1, the Ministry of Finance and State Taxation Administration released an official notice governing personal income tax on dividend income earned by foreign individuals.
Effective September 1, 2026, dividends that foreign individuals obtain from Chinese‑based foreign‑invested enterprises will incur a 20‑percent personal income tax levy.
As stipulated by the updated provisions, the foreign‑invested enterprise distributing dividends bears the primary obligation to withhold applicable taxes and complete tax filings by the 15th day of the subsequent month.
In cases where tax withholding is not performed by the enterprise, the foreign individual dividend recipient shall settle the tax liability by June 30 of the next calendar year, unless local tax authorities set an earlier due date.
This official notice formally repeals the long‑standing preferential tax exemption previously applicable to such dividend payouts.
Does this mean all tax‑exclusive perks for foreign nationals have been abolished?
The answer is negative.
Foreign individuals working in China may still access multiple tax preference schemes upon satisfying corresponding qualification criteria.
- Housing Subsidy: Non‑cash housing benefits or expense‑reimbursement housing subsidies stay tax‑free once relevant conditions are satisfied.
- Dining Subsidy: Reasonable meal support delivered via non‑cash methods or expense reimbursement qualifies for tax exemption.
- Relocation & Laundry Reimbursements: Qualified reasonable relocation costs and laundry expenditures are eligible for tax relief subject to regulatory prerequisites.
- Business Trip Allowances: Reasonable domestic and cross‑border travel stipends for business purposes retain favorable tax treatment.
- Family‑Related & Educational Expenses: Eligible family‑visit costs, language training fees and children’s schooling expenses can be tax‑exempt, with required supporting documentation in place.
Full personal income tax waivers remain available for select foreign specialists employed in China.
Qualified foreign experts fall into the categories listed below:
- Specialists dispatched to China directly by the World Bank under its special loan arrangements;
- Professionals deployed to China by United Nations agencies;
- Personnel participating in China‑bound United Nations aid initiatives;
- Experts assigned by foreign governments for their respective grant‑funded assistance projects operated inside China;
- Cultural and education specialists under bilateral government exchange initiatives, whose compensation originates from overseas employers and whose tenure in China does not exceed two years;
- Participants of designated international exchange programs hosted by Chinese universities, receiving home‑country remuneration and staying in China for a maximum of two years;
- Researchers engaged under approved private scientific cooperation contracts, whose salaries are funded by governmental bodies of their home jurisdictions.
