China's Annual IIT Reconciliation: What Employers and Foreign Staff Need to Do

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Quick answer: Every year from 1 March to 30 June, tax residents in China settle their individual income tax (IIT) for the previous year. Employees must file if they owe more than RMB 400 and their annual income is above RMB 120,000, or if they want a refund. An employee can ask the employer to file for them by confirming in writing by 31 March.

Last updated: November 2026

China annual IIT reconciliation at a glance – filing from 1 March to 30 June, employer filing requested by 31 March, and no filing needed for RMB 400 or less owed or income of RMB 120,000 or less

Monthly payroll withholding is only an estimate. The annual reconciliation settles the final figure, taking account of deductions, bonuses and income from other sources. For foreign employees, it also involves choices that change how much tax they pay.

This guide explains how the China annual IIT reconciliation works: who must file, the key dates, the deductions employees can claim, the choices for foreign staff and what employers should do before the filing season opens.

Who Must File?

A tax resident must complete the reconciliation if either of these applies:

Tax withheld during the year was more than the final liability, and they want a refund.
Annual comprehensive income is above RMB 120,000 and the extra tax due is more than RMB 400.

Until 31 December 2027, no filing is needed where income is RMB 120,000 or less and tax is owed, or where the extra tax due is RMB 400 or less. Comprehensive income covers wages and salaries, fees for independent services, author's fees and royalties.

Key Dates

Date	What happens
Late February	Appointments open in the IIT app for early filing
1 to 20 March	Filing by appointment only
31 March	Last day for employees to ask the employer to file for them
21 March to 30 June	Open filing, with no appointment needed
30 June	Deadline for filing and paying any tax due

These dates applied to the 2025 tax year, filed in 2026. The tax authority confirms the timetable each February.

Three Ways to File

Option	How it works
Self-filing	The employee files through the IIT app or the online tax portal.
Through the employer	The employee confirms in writing with the employer by 31 March, and the employer files for them.
Through an agent	A tax adviser or other agent files under a written authorisation.

Deductions Employees Can Claim

On top of the RMB 60,000 basic deduction and their own social insurance and housing fund contributions, employees can claim these special additional deductions:

Deduction	Amount
Children's education	RMB 2,000 a month per child
Care of children under 3	RMB 2,000 a month per child
Support for elderly parents	Up to RMB 3,000 a month, shared between siblings
Continuing education	RMB 400 a month, or RMB 3,600 in the year a qualifying certificate is obtained
Housing loan interest	RMB 1,000 a month for a first home
Housing rent	RMB 800 to RMB 1,500 a month, depending on the city
Serious illness	Medical costs above RMB 15,000, up to RMB 80,000 a year, claimed only in the reconciliation

Deductions missed during the year can still be claimed in the reconciliation, so it is often worth filing even when filing is not required.

Choices for Foreign Employees

A foreign individual who spends 183 days or more in China in a calendar year is tax resident for that year and goes through the reconciliation like any other resident. Each year, foreign employees choose one of two options:

Tax-exempt allowances for housing, children's education and language training, paid by the employer against valid fapiao.
The special additional deductions listed above, available to all taxpayers.

They cannot claim both, and the choice cannot be changed during the tax year. The allowance option is available until 31 December 2027. See China's Extended Preferential Tax Policy for Foreign Individuals.

Residents for fewer than six consecutive years are generally not taxed on income from outside China paid by overseas entities. After that, income from outside China must be declared in the reconciliation. See China's Six-Year Rule for Foreigners.

Non-resident foreign employees do not take part in the reconciliation. Their tax is settled through monthly withholding.

What Employers Should Do Before the Season Opens

Check that monthly withholding was correct, including bonuses and benefits in kind.
Confirm in writing which employees want the company to file for them, by 31 March.
Give foreign employees a clear summary of their income and tax-exempt allowances.
Check that each employee's year-end bonus was taxed under the method that suits them. See Year-End Bonus Tax in China.
Remind employees of the 30 June deadline.

China Annual IIT Reconciliation at a Glance

Item	What applies
Filing period	1 March to 30 June, for the previous tax year
Who must file	Residents owing more than RMB 400 with income above RMB 120,000, and those claiming a refund
Employer filing	Employee confirms in writing by 31 March
Basic deduction	RMB 60,000 a year
Foreign employees	Choose tax-exempt allowances or special additional deductions
Non-residents	No reconciliation; tax settled through withholding

Our China cloud payroll service handles the monthly withholding the reconciliation relies on, including bonuses and tax-exempt allowances for foreign staff. For companies whose payroll we administer, we also file the annual reconciliation for employees who ask the company to do so. For staff hired without a local company, our employer of record service does the same.

Frequently Asked Questions

What happens if an employee misses the 30 June deadline?

The tax authority will usually remind them to file. Tax still owed attracts a late-payment surcharge of 0.05% a day, and continued failure to file can lead to fines and affect the employee's tax credit record.

Is the employer responsible for an employee's reconciliation?

No. The reconciliation is the employee's own obligation unless they ask the employer to file for them. The employer is responsible for correct monthly withholding, and errors there can lead to penalties for the company.

Do non-resident foreign employees file?

No. Non-residents do not take part in the annual reconciliation. Their tax is settled through monthly withholding.

Is it worth filing when it is not required?

Often, yes. Employees who had too much tax withheld, or who missed deductions such as children's education or housing rent during the year, can only get a refund by filing.

How are refunds paid?

Refunds are paid into a Chinese bank account in the employee's own name, registered in the IIT app, after the tax authority has reviewed the filing.

Make IIT season easy for your team

Our payroll team gets monthly withholding right and, for companies we administer, files the annual reconciliation for employees who ask.

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Woodburn Accountants & Advisors helps international businesses set up and run companies in mainland China and Hong Kong. With more than 30 years' experience and offices in Shanghai and Hong Kong, our team of chartered company secretaries, certified public accountants and tax specialists has guided hundreds of foreign companies, from first-time market entrants to established multinationals, through company registration, accounting, tax, payroll and annual compliance. We combine large-firm expertise with boutique responsiveness.

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