China's Six-Year Rule for Foreigners: The Key Points
- 4 days ago
- 2 min read
In this short Woodburn Academy session, Kristina Koehler-Coluccia explains China's six-year rule for foreign residents and what it means for tax on worldwide income. It runs for about seven minutes.
About the speaker
Kristina Koehler-Coluccia is Head of Business Advisory at Woodburn Accountants & Advisors. She has spent more than two decades helping foreign companies set up and run their operations in China and Hong Kong, and she leads the firm's Woodburn Academy sessions.
What this session covers
The 183-day test that makes an individual a tax resident in China
How the six-year count works, starting from 1 January 2019
Resetting the clock: fewer than 183 days in a year, or 30 or more consecutive days outside China
What crossing the six-year mark means for tax on worldwide income
Rates of up to 45%, and what that does to expatriate planning
Why this matters if you have staff in China
The rule is easy to state and easy to get wrong. Spend 183 days or more in China in a calendar year and you are a tax resident for that year. Do that for more than six consecutive years, counted from 1 January 2019, and worldwide income becomes taxable in China rather than only China-sourced income. The reset options are narrow: fewer than 183 days in a given year, or a single absence of 30 or more consecutive days. With top rates reaching 45%, the difference between planning for this in advance and discovering it afterwards is substantial.
Anyone managing assignees in China should be looking at China cloud payroll, the visa application position and the annual tax and audit cycle together rather than separately.
Watch the full session
Thinking about setting up in China?
Woodburn Accountants & Advisors helps foreign companies register and run entities in China and Hong Kong, from company registration and trademark protection through to accounting, payroll, tax and audit. If this session has raised questions about your own plans, get in touch with our team.