Tax administration against expatriate personnel’s individual income tax (“IIT”) filings is being escalated in a number of cities in China.

Beijing Local Tax Bureau has formalised regular data system interface with various government departments, including Industrial and Commercial Bureau, Human Resources Bureau, Social Security Bureau, Public Security Bureau and other departments. By frequent information exchange, expatriates IIT administration is enforced in an all-round way. For example, the tax authorities may notify the Exit & Entrance Administration Bureau to restrict a tax-owing expatriate from leaving China according to “China’s Tax Collection & Administration Law”. With better interdepartment information exchange, the implementation of this provision has been enhanced.

Xiamen Local Tax Bureau has put all foreign personnel in a categorization program to facilitate benchmarking on their declaration of bonuses, incentives, stock options and any other offshore-paid income. An alert system has been built in to detect any late, failed or no-tax IIT filings, and to capture those income earning from multiple locations without a consolidated tax declaration. Expatriates’ IIT declarations will be centralised and scrutinised against the data they declared and those provided by third parties.

Anhui Local Tax Bureau has required expatriates to conduct IIT self-examination for themselves covering the period from year 2011 to 2013.

All in all, expatriate personnel in China is advised to ensure their IIT obligation is fulfilled timely and properly according to the Chinese laws and regulations.

The article below was contributed by Martin Ng and Ened Du from WTS Consulting (Shanghai) Ltd.