The Termination of Tax-Free Benefits-in-Kind for Highly Skilled Expatriate Workers

As China has accelerated its integration with the global economy over the last decade, a key element of its strategy has been attracting and retaining foreign talent. Part of this effort has been creating tax-exempt allowances for expats, including housing rental, children’s education expenses and more. Foreigners in China tend not to be on the ground for a long enough period that purchasing a residence is viable, nor do they have access to the public school system and must send their children to expensive international schools. At the end of the calendar year, those deductions for rent and schooling (among others) will be discontinued, and Canadian firms and employees alike will be facing a significantly different financial outlook come January 2022.

CCBC’s position paper on the proposed changes to the individual income tax policy in China outlines these adjustments, and what they mean for organizations and workers here based in the PRC. We are deeply concerned for those invested in China that will be affected negatively by these forecasted cancellations. CCBC continues to advocate for the permanent extension of the current policies, including efforts aligned with other national chambers of commerce across China.

If you have any questions about the planned updates to this policy, please get in touch with our China team through Noah Fraser, MD China, at noah@ccbc.com.cn.