Individual Income Tax initiatives to attract foreign talent in South China

In a continued drive to promote business growth in the GBA[1], a series of individual income tax (IIT) initiatives have been introduced in a bid to attract high-end foreign talent.

Under new tax subsidies, qualifying overseas persons working in one of nine target cities[2] in the GBA are able to make an annual application for tax subsidies, covering a broad range of taxable income. These include salaries and wages, income from royalties and income from business operations.

The new system came into effect on 1 January 2019, with the first application period successfully rolled out from July to August 2020. This is expected to be replicated in an annual window for subsidy applications. In effect, the subsidiary evens out the tax payable between Hong Kong salaries tax and IIT in China, providing a general rebate on tax payable in excess of 15%.

Specific criteria vary per local government regulation but, in general, the applicant must be an ‘overseas’ person, must be working and paying taxes in one of the target cities, and must be deemed ‘high-end talent’ or ‘talent in short supply’.

The initiative is a clear push to enhance the appeal for foreign talent working in the GBA, and another step down the path of ever-greater internationalisation.

If you’re interested to find out more about how the China’s IIT initiatives impact your business, please contact our experts.

[1] The Greater Bay Area, consisting of Guangdong, Hong Kong and Macau

[2] Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing