Chinese citizens with foreign earnings were reeling yesterday from their government’s announcement that it will be taxing their overseas income at up to 45%.
According to Bloomberg, the Chinese authorities have begun tracking expats and enforcing tax filing–something they have not had to do in the past.
Although Beijing passed changes to its tax legislation early last year, the full effect of these has only just become apparent, with Chinese expats caught off-guard.China didn’t have such a large number of expats working overseas when the old tax legislation was drafted decades ago.”
According to Bloomberg, there are between 80,000 and 150,000 expat Chinese living in Hong Kong alone, most of whom would previously have had to remit around 15% of their income in taxes to the mainland government.
Jacky Chu, PwC China’s global mobility services head, told Bloomberg: “We have seen a surge of companies asking for our advice.”
“China didn’t have such a large number of expats working overseas when the old tax legislation was drafted decades ago. That could be why many people were not entirely aware of the requirement.”
The new expat rules cover salaries, dividends, savings and property sales. There are more than 50 million Chinese expats around the world.