Foreign individuals who qualify as Chinese tax residents may choose either special additional deductions for IIT or IIT exemptions on eligible allowances and subsidies, such as housing, children's education and language training. 

The two types of tax benefits cannot be claimed simultaneously, and the choice cannot be changed within the same tax year. The subsidy exemption policy remains in effect through Dec 31, 2027.

Here are the key rules governing these allowances and subsidies in China:

• Foreign individuals who receive reasonable housing subsidies, meal allowances and laundry fees in non-cash form or on a reimbursement basis may be exempt from IIT. When filing their IIT return for wages and salaries in the month after they first receive such subsidies or the amount or payment method changes, they must submit valid supporting documents to the competent tax authority for verification and confirmation of the exemption.
• Foreign individuals who receive relocation reimbursements on an actual-expense basis in connection with taking up or leaving employment in China may be exempt from IIT on the reasonable portion, provided they submit valid supporting documents for review by the competent tax authority.
• Monthly or periodic payments made in the name of relocation by foreign-invested enterprises or by establishments or premises of foreign enterprises in China to their foreign employees must be included in taxable wages and salaries.
• Foreign individuals who receive domestic or overseas business travel allowances based on reasonable standards may be exempt from IIT, provided they submit copies of transportation and accommodation receipts or the employer's relevant business travel plan for confirmation by the competent tax authority.
• Foreign individuals who receive subsidies for language training in China or for their children's education in China may be exempt from IIT on the reasonable portion, provided they submit expense receipts and documents showing the duration of the training or education for review by the competent tax authority.
• Foreign individuals who receive family-visit allowances may be exempt from IIT on the portion actually used for their own family visits, provided they submit copies of relevant transportation expense receipts and the competent tax authority determines that the number of visits per year and the payment standards are reasonable.

 

In addition to the tax benefits outlined above, wages and salaries earned by foreign experts may be exempt from IIT if they meet any of the following conditions:

• They are directly dispatched to work in China by the World Bank under a special-purpose loan agreement.
• They are directly dispatched to work in China by a United Nations organization.
• They work in China on a United Nations aid project.
• They are sent by a donor country to work in China on a non-reimbursable aid project funded by that country.
• They are cultural or educational experts who work in China for no more than two years under a cultural exchange program agreed between the governments of the two countries, with their wages and salaries paid by the sending country.
• They are cultural or educational experts who work in China for no more than two years under an international exchange program of a Chinese college or university, with their wages and salaries paid by the sending country.
• They work in China under a nongovernmental scientific research agreement, with their wages and salaries paid by a government institution in the sending country.

 

Updated July 29, 2026

 

Sources: State Taxation Administration, Ministry of Finance