Whether you're traveling, working, or investing in China, it helps to understand the tax rules that apply to you.

This guide highlights some of the key tax policies and benefits you should know about.

Part 1

Travel in China: don't forget to claim your departure tax refund

Q: I've noticed "Tax Free" signs in many stores while traveling in China. How does the departure tax refund work, and what are the requirements?

A: Overseas visitors can apply for departure tax refunds if they meet the following conditions:

- The total value of tax-refundable goods purchased by the same visitor in the same store on the same day reaches 200 yuan ($29.30).

- The goods remain unused.

- The departure date is within 90 days of purchase.

- The goods are taken out of the country by the visitor, either in hand luggage or checked baggage.

Part 2

Work in China: don't forget the tax benefits available to you

Q: I'm a foreign teacher and have been living in China this year. Do I need to complete the annual individual income tax settlement?

A: If you have lived in China for a total of 183 days or more this year, you are considered a tax resident and are required to complete the annual individual income tax settlement.

Q: I rent an apartment in China, and my school reimburses my housing costs based on actual expenses. Can this be tax-exempt?

A: Yes. Foreign individuals are temporarily exempt from individual income tax on the following benefits when provided in non-cash form or reimbursed based on actual expenses:

- Housing allowance

- Meal allowance

- Relocation expenses

- Laundry expenses

If you qualify as a tax resident, you may choose one of the following tax treatments:

- Special additional deductions, or

- The tax-exempt allowance policy for foreign individuals

These two options cannot be used simultaneously, and once one is selected, it cannot be changed within the same tax year.

Part 3

Invest in China: don't forget the available tax credit

Q: We hold equity in a Chinese resident enterprise and plan to directly reinvest in China the profits it distributes this year. Can this investment qualify for the tax credit policy for overseas investors who directly reinvest distributed profits in China?

A: Yes. If overseas investors directly reinvest profits distributed by Chinese resident enterprises in eligible domestic investments between Jan 1, 2025, and Dec 31, 2028, they may be eligible for a tax credit equal to 10 percent of the reinvestment amount against their tax payable for the current year.

Any unused credit can be carried forward to future years.

If the applicable tax treaty rate on dividends under a tax treaty between China and another country is lower than 10 percent, that rate may apply.

Source: Shanghai Municipal Tax Service of the State Taxation Administration