CHINA-ECONOMY: CHINA CHANGES TAX LAWS TO DETRIMENT OF EXPATRIATES

The South China Morning Post (April 1) reported that a survey released on April 1, by the American Chamber of Commerce (Amcham) showed that more than a third of multinational firms in Shanghai are considering moving all or part of their operation out of China or to another Chinese city when tax exemptions on allowances for foreign employees expire next year. Beijing had said at the end of 2018 that tax breaks for expat allowances, including those available for language training, housing, and children’s education would be phased out at the beginning of 2022 after a three-year transition period.

The change was introduced partly to equalise benefits between local and foreign workers after the government introduced tax deductible items as part of personal income tax reform. As the deadline has approached, many foreign companies have become increasingly worried. Nearly 70 per cent of the 102 firms surveyed by the American Chamber of Commerce (AmCham) in Shanghai in March said the new rule would make it more difficult for them to bring highly-qualified foreign talent to the city, a hub for multinationals in China.







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