What is the tax position of some people who do not reside in China but still receive wages or a salary for a position that they concurrently hold in their company's China-based operation?
These people will have to take note of the Notice of the State Administration of Taxation on the Issue of the Imposition of Tax on Directors of Foreign Enterprises Who Concurrently Hold a Position in China. The Notice states that any income that is paid in respect of the position in China is PRC-sourced income and therefore is subject to individual income tax. If an individual fails to report or untruthfully reports his/her salary in China, the consequences shall be that the PRC tax authorities may determine the salary on the basis of salaries in similar companies and industries and require the China-based enterprise to withhold tax on the salary.
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