The guide includes information on a number of categories, a portion of which we have summarised below. Click here to read the guide in full.

Banking and payments

As we noted in a recent article, China is taking positive steps to expand access to payment options for foreigners. In addition to mobile payment, which the guide notes can now be used with international cards, individuals can now open a Chinese bank account simply by presenting a passport (or another relevant form of ID) – previously, many banks required a residence permit or other more permanent documentation. You may need a Chinese SIM card, however, that can also be easily obtained with just your passport.

Travel

The guide details various modes of transport, from trains to local metro systems to ride-hailing apps. Once you have signed up for WeChat or Alipay, many travel services can be accessed through those platforms. The main thing to note is that in order to travel by train (which is undoubtedly one of the best ways to get around China) you will always need to use your passport – both to buy tickets and to enter the station and board the train.

Social insurance and individual income tax

Foreigners employed and earning money in China are required to participate in China’s social insurance scheme.  The guide also emphasises that people who live in China (or have been in China for more than 183 days in a tax year) need to file an annual individual income tax return with the tax authority, and gives details of how this can be carried out. If you are employed by a company, they can usually advise on both these processes.

The post A new guide to living and working in China as an expat appeared first on Focus - China Britain Business Council.

The extension of the individual income tax (IIT) preferential policies means that non-China domiciled tax residents (i.e., people who do not have a domicile in China but live for 183 days or more in China in a given tax year) can continue to enjoy tax exemptions on eight categories:

• Housing rental
• Expenses for children’s education
• Language training expenses
• Meal fees
• Laundry fees
• Relocation expenses
• Business travel expenses
• Home leave expenses (i.e., travel to home country)

These benefits are usually not included in the salary and wages but are paid on a reimbursement and non-cash basis. They can be exempted from IIT provided that the expenses are reasonable in amount and there are corresponding supporting documents, such as invoices (fapiao), for each expense. In addition, there are some specific requirements for each category. For example, for home leave expenses, only two trips per year for the expat from China to their or their spouse’s home country can be exempt from IIT.

Many analysts were confident that the policy would be extended beyond the previous deadline of 31 December 2023, especially since the economy is showing signs of a slowdown and the government is attempting to reduce the tax burden on the middle classes to encourage consumer spending. Nevertheless, the extension has come as a relief for foreign workers, who would have seen their personal tax burden increase significantly, especially in terms of the cost of educating their children (tuition fees at international schools in first-tier cities can be up to £38,000 per year). It will also benefit companies trying to increase their hiring of foreign talent now that China’s borders are fully open post-Covid.

What does this mean for companies operating in China?

Overall, these policy extensions are likely to benefit companies in China, as it may help them to attract and retain new talent. It will also been seen as a positive move by the international education sector, as it means that foreign professionals in China will likely continue sending their children to pricey international schools.

Nevertheless, companies that made preparations for the original tax income policy change, such as amending labour contracts, restructuring salary packages, and reshuffling staff allocations, may need to roll back the decisions for the time being and save their plans for possible future needs.

Portions of this article first appeared in Dezan Shira & Associate’s China Briefing

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When I speak to Mark Kitto from his North Norfolk home, he is sporting a neat handlebar moustache. Accompanied by ever-so-slightly greying hair, a strong jawline and a booming voice, Kitto looks every bit an early 20th-century military general.

The moustache, he explains, is a necessity for the latest chapter in his ever-evolving career. All three of the characters in his solo theatre show Chinese Boxing – a play about the Boxer Rebellion of 1900 that he has written, directed and is starring in – sports a form of moustache.

Kitto, the former metals trader, well-known publisher and hotelier, has managed to fit more careers into his five decades than most people could in a lifetime. But his latest – and arguably most rewarding – career shift is treading the boards up and down the country in his one-man show.

The former Welsh Guards Captain has achieved success in a number of different industries but is best known for his time as one of the early foreign publishers in China as the founder of the That’s Magazines series. The English language publications were an essential guide for expats to navigate Shanghai, Beijing and Guangzhou, informing them of the best places to eat, drink, and shop, as well as how to enjoy some of the country’s burgeoning cultural scenes. But when the business started to become financially successful, local government rivals decided to take his licences and effectively evict him from his own business.

In 2009, Kitto published a book documenting the travails of setting up businesses in China. That’s China was an entertaining and often eye-opening account of the risks of doing business in China during China’s period of rapid growth and desire for earning a quick buck – at any cost.

Kitto outside his hideaway in Moganshan (Photo: Shiho Fukada)

After he was removed from his own publishing business, he moved to the mountain retreat of Moganshan, two hours west of Shanghai, which was the summer destination of wealthy British expats and Chinese triads alike a century before. Most of the stunning villas that were built in the early 20th century had fallen into ruin so Kitto and his wife set up a cafe and guesthouse to appeal to 21st-century expats looking to escape the hustle and bustle of modern-day Shanghai. Kitto wrote a second book, China Cuckoo, about his eight years in the cool bamboo forests.

“Of all the places in China, [Moganshan] is the one where I most felt part of the community for the very simple reason that the locals, the older guys, had all grown up surrounded by foreigners,” Kitto explains. “Their parents worked for foreigners, and when I appeared in the village, it was a simple case of, ‘Oh yeah, they’re back.’ So what they did was treat me like, ‘Where have you been all this time,’ which was really, really nice for China.”

But in 2012, after nearly two decades in China, he decided to return to the UK, penning a much-imitated departure letter to China that was published in Prospect Magazine, where he wrote a regular column.

Kitto’s return to the UK saw him launch a local listings newspaper covering North Norfolk. Kitto talks about missing the size and speed of China but also how business in China is done in a more gentle manner. “When you know the rules of the game and you know what’s going on, I find it a more pleasant way of business or social interaction,” he says. “The problem with many in the UK is that they’re sort of quite aggressively defensive. They’re not open to new ideas.”

The nice thing about Britain is that the government supports you. It doesn’t kick your door down and fine you because one of their mates has called them up

His return to the UK also saw him return to one of his first loves – acting. “I’ve always been interested in it. I did some at uni in Beijing in the 80s and I did a bit of stuff in Beijing in the mid-90s when I got back there.” He performed in the musical Cabaret in Beijing in 1996 and acted for the Shanghai People’s Arts and had a great experience. “Right from the get-go people were saying: ‘Oh, you’re quite good at this. Have you ever thought of doing it seriously?’ And I said, ‘Well, kind of. But never seriously, seriously.’” After taking a few courses and a few more parts in student films he started to get more offers and since 2018, it has really taken off.

But today, he is talking about his one-man show Chinese Boxing. The idea came about after Kitto was reading a report about China’s mass-mobilised citizen-led online army and it gave him a thought: “We’ve got the Chinese government using Chinese people citizens as their tool – as a little sort of secret weapon against people and especially against foreigners. It just made me think of the Boxer Rebellion,” he says.

Poster for Mark Kitto’s one-man show, Chinese Boxing

After plenty of reading and research, Kitto said the main three characters just simply walked in the door. The first is the frightfully proper Sir Claude MacDonald, who was the minister plenipotentiary – ambassador to Peking – in 1900 and commanded the defence of the Legations when they were besieged by the Boxers. The second character is Rong Lu. He was actually military imperial commissioner in charge of military training and commander of the Beijing garrison. 

“He was basically the top military dog in the Qing Dynasty in Beijing, and he was ordered by the Empress Dowager Cixi to help the Boxers kill all the foreigners. Of course, the big twist of the play is that he actually helped the foreigners survive.” This rumoured former lover of Cixi did in fact reach out to the foreign relief force when they arrived outside Beijing but was ignored by the foreign generals and he faded into obscurity.

“And then there is Sergeant Frank Richards, who is a real person who was in the Royal Welsh Fusiliers. He served in the First World War and wrote the best first-hand account of the First World War by a junior soldier,” says Kitto. “Richards is down and dirty and quite cheeky, and just gives the real, earthy accounts of the relief force. And having been in the Welsh Guards myself, having a Welsh character in Welsh is about the only accent I can get away with.”

Because these are first-hand accounts, Kitto wanted to ensure his research was accurate. He revisited Peter Fleming’s The Siege at Peking and read McDonald’s Diaries, as well as History in Three Keys by Paul Cohen, and the enjoyable Indiscreet Letters from Peking by Bertram Lennox Simpson – also known as Putnam Weale – who was eventually murdered during the warlord era.

Playing a Chinese character hasn’t been without its challenges, says Kitto. He was cancelled by one small Norfolk theatre that argued playing a Chinese character could be perceived as racist. Although Kitto turned up with a book of references and reviews, their ambitions to win an anti-racism award would be put in jeopardy if they let him play it. Kitto explained that the play is about cross-cultural understanding. The theatre made an apology but it was not to be at that particular theatre.

The show is a warning for Western audiences, he says. “It shows what the Western world did to China and should help explain why China feels the way it does about us,” he argues. Chinese audiences love it, he says, because it puts through a viewpoint others hear less regularly.

The post-show Q&A he says can also be very entertaining and lively as debates ensue and questions allow Kitto to share more of his career and personal stories of China.

The show will be at the Playground Theatre 9-12 March 2022, and Head Gate Theatre, Colchester on 15 March 2022  

The theatre offers a special ticket deal of ‘10 for £10’. Mark’s books are both now available in audiobook form.

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News of recent changes to Individual Income Tax (IIT) for foreigners in China spread like wildfire over WeChat and other social networks. Numerous amendments regarding the “five-year rule” fueled uncertainty as foreigners were left wondering whether the rule would remain or not. Effective January 1^st, 2019, the five-year rule not only remains but has been increased to six years, amongst other changes to IIT law for foreigners in China.

China new IIT Law: Tax Resident and Non-Tax Resident

China’s new IIT law, which took effect from January 1^st, 2019 defines tax / non-tax residents in line with OECD tax guidelines. Foreigners, including HK, Macau and Taiwan passport holders, who reside in China for a cumulative total of 183 days or longer within a tax year – which runs from January 1^st until Dec 31^st – are considered a “Tax Resident” and will be taxed on their worldwide income. Anyone residing in China for less than 183 days over a tax year will be considered “Non-Tax Resident” and taxed only on the China-sourced income.

Tax Resident: The five-year rule becomes the six-year rule

Under old IIT law, the five-year rule stated that income sourced and paid overseas is exempt from China individual income tax for five years, after which it will become taxable in China. A well-known tax concession within IIT law has allowed countless foreigners living in China to extend the five-year tax exemption period repeatedly. This has been possible, because – under the previous system – if a foreigner should leave China for more than 30 days consecutively or 90 days cumulatively in any tax year during a five-year period, they “reset” the clock on the five-year tax exemption period.

Under the new IIT Law, the five-year tax exemption period has been increased to six years, and if the foreigner leaves China for more than 30 days consecutively in any tax year during a six-year period, they “reset” the clock on the tax exemption period, and the income sourced and paid overseas is exempt from China’s Individual Income Tax.

Non-Tax Resident: 90-day rules

Included in the new IIT law effective January 1^st, 2019, are the same tax exceptions for non-tax residents working in China. Foreigners who come to China to work for a period of fewer than 90 days cumulatively in a tax year can have their China-sourced income exempt from China individual income tax as long as the income is paid and borne overseas.

Below is a chart of how tax liability is recognised under the China New IIT Law

New filing requirements

The new IIT law also introduces comprehensive income tax filing. This replaced the special tax rates for remuneration of services, income from royalties and authors’ remuneration with the progressive income tax rate applied to wages and salary. China tax residents must now file provisional monthly tax return along with an annual tax reconciliation return between March 1^st to June 30^th of the following year based on the comprehensive income. Non-tax residents must file tax returns on a monthly basis or on each occurrence.

Effective January 1^st, 2019, the five-year rule not only remains but has been increased to six years

Phasing out preferential tax policy

Since 1994, foreigners in China have enjoyed preferential tax policies in the form of non-taxable allowances (e.g. housing allowance, meal allowance, education allowance, home-country visits etc.) without an official ceiling amount. They often make up between 40 percent to 50 percent (or even higher) of compensation packages for foreigners living and working in China, thus allowing foreigners to significantly reduce their tax liability.

From January 1^st, 2019 however these preferential tax policies will be transitioned out over a period of three years (ending on December 31^st, 2021) and will be replaced with a single tax policy for both foreigners and locals. This single tax policy includes six itemised deductions based on standardised amounts.

 ** Old policy: No-cap deductions must be claimed using authentic Fapiaos (China official tax invoices) and relevant supporting documents. See FOCUS guide to Fapiao accounting here.

Starting on January 1^st, 2019, foreigners working in China can choose whether they want to utilise the new itemised deduction policy or continue to enjoy the preferential tax policy currently provided to them until December 31^st, 2021. If the foreigner chooses to change over to the new policy early, they will be unable to transition back to the old policy within a tax year.

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