Under the Chinese Individual Income Tax Law and its Implementing Rules, wages and salaries deriving from labor services provided in China are taxable. How is the phrase "wages and salaries" defined?
The phrase "wages and salaries" is defines to include bonuses, year-end extras, profit shares, subsidiaries, allowances and other income.
Salaries or wages are considered to be PRC-sourced if they are paid in respect of a function held or work carried out in China. An employee resident in China will only have his PRC-sourced income assessed for tax. A non-resident employee on the other hand will have to pay tax on his PRC-sourced income once he has been resident in China for more than 90 days (or 183 days under relevant tax treaties).
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