Tax Tips for Foreign Writers in China ： Earnings from Overseas

Tax Tips for Foreign Writers in China: Earnings from Overseas

One of our readers shot us a question lately. Since this might be something a lot of folks wonder about, we're sharing the question and our reply on it here—hope it helps more people out! 

Question: I'm a foreigner who lives in mainland of China most of the year (only leave for a handful of days annually) and make a living writing for overseas websites. How do I handle taxes here?  

Response: This involves three aspects, which I will address one by one:

1. Determination of tax residency status:

Article 1 of the Individual Income Tax Law of the People's Republic of China stipulates that an individual who has a domicile in China, or who does not have a domicile but has resided in China for a cumulative period of 183 days or more in a tax year, is a resident individual for tax purposes. You should be considered a Chinese tax resident and are required to pay individual income tax on your income derived from both within and outside China.

2. Classification of income items and withholding of taxes in advance:

If you have no employment relationship with the overseas websites, just finish your job as a freelancer, and bear the costs of writing tools and creative risks yourself, your income should be taxed as remuneration for personal services.

The taxable income from remuneration for personal services is calculated as the income after deducting 20% of the total income. The withholding agent shall withhold and prepay taxes on a per-transaction or monthly basis in accordance with Table 2 of the Individual Income Tax Withholding Rates. For example, if you receive 10,000 yuan for a writing task, the taxable income is 10,000 × (1 - 20%) = 8,000 yuan, and the amount of tax to be withheld and prepaid is 8,000 × 20% = 1,600 yuan.

3. Whether final settlement is required and the methods for handling it:

As you qualify as a Chinese tax resident and have comprehensive income (including the aforementioned possible remuneration for personal services, remuneration for contributions, etc.), you need to file a final settlement between March 1 and June 30 of the year following the year in which the income is obtained. There are several ways to handle this:

1) Online processing: You can use the Individual Income Tax APP or the Natural Person Electronic Taxation Bureau. This is the most convenient method. For first-time use, you need to register first, then enter the annual final settlement declaration module, and follow the system prompts to gradually enter information such as income and deductions. The system will automatically calculate the amount of tax to be supplemented or refunded.

2) Declaration at a tax service hall: You can also go to the tax service hall of the competent tax authority with your ID documents, supporting materials related to income and deductions, etc., to complete the final settlement.

Note: If you are deemed a non-resident individual due to special circumstances (for example, although you reside in China permanently, your stay in a certain tax year does not reach 183 days), you are still required to pay taxes on your income but are not required to file a final settlement.