China has revised its recently updated Individual Income Tax Law to lengthen the time foreign workers must spend on the mainland before being considered a resident, after concerns grew that the new rule would scare away overseas talent, Caixin reports.
The update stated that foreign employees who lived in China more than half the year would have their global income subject to Chinese taxes, similar to the system enforced in the US and the UK. The previous time limit was one year.
The current system holds that foreigners living in China for more than a year can leave every five years for a 30-day stint in order to avoid paying tax on offshore income. The revision extends this period from five years to six. It will take effect on New Year’s Day.