Second letter to the State Taxation Administration (STA) on the Cancellation of Non-Taxable Benefits per Individual Income Tax Law (IIT) Amendment

2020-07-08 | All chapters

The European Chamber appreciated the meeting with Director General Luo Tianshu following our last letter send on 3rd July 2019. The discussion between your colleagues and representatives from our European Chamber Finance and Taxation and Human Resources Working Groups on 20th August 2019 gave us the opportunity to discuss the existing non-taxable treatment of reasonable reimbursements for foreign expatriate employees, an issue of critical importance for all EU members and foreigners working in China. 

The worldwide expansion of the pandemic is affecting global foreign direct investment. China´s utilization of foreign investment is also facing a great challenge. We observe that currently China is committed to advance in the opening up of its economy, aiming to positively attract more foreign investment into the country. This is also reflected in last month’s important announcement by the Chinese government regarding developing Hainan into a Free Trade Port, where by adopting similar incentives as those of Hong Kong the purpose is to attract foreign investment into Mainland China. On the other hand, the Chinese government is also striving to stabilize the existing foreign investment base in China, mainly by continuing to improve the business environment and make foreign investors feel confident about their investments and development in China. 

We believe that, as a supporter and benefactor of the multilateral system, China can appreciate the value of both foreign investment and talent. Keeping the non-taxable reimbursements would help ensure the full potential of both international human and capital investments continue to flow into China.