Chinese Authorities Offer Income Tax Settlement Plan For Foreign Workers

by Mary Swire, for LawAndTax-News.com, Hong Kong

12 March 2004

The Chinese State Administration of Taxation is to offer overseas workers a chance to settle outstanding tax liabilities without incurring penalties, it emerged this week.

Foreigners who are employed in China for more than 183 days a year are obliged to pay personal income tax on a monthly basis. However, until the recent tax evasion crackdown enforcement was lax, which resulted in many instances of non-payment.

Under the proposals unveiled on Thursday, overseas workers who file returns and settle their outstanding tax liability for the past three years by the end of June will receive a penalty fee waiver. Penalty fees for unpaid taxes can range from between 50% and 500% of the outstanding amount, depending on the circumstances.

Speaking to the South China Morning Post, Ernst & Young tax partner, Joseph Fu explained that:

"This transitional policy is really to give people a message saying that we understand the problem is not all your fault, so we are giving you a way out."

Recommended