Liability to Individual Income
In accordance with the Individual Income Tax (IIT) Law amended by China’s NPC in 2007, individual income tax is imposed on all individuals, including both PRC and foreign nationals residing in or deriving income from the PRC.

• Territoriality

PRC residents are generally subject to tax on their worldwide income. Non-residents are subject to tax on their PRC-source income only.

• Definition of Resident

PRC residents include the following persons:

• Individuals who maintain a permanent home in the PRC; and
• Individuals who do not maintain a permanent home in the PRC, but reside in the PRC for one year or longer.

Individuals are considered to have resided in the PRC for one year if they reside in the PRC for 365 days during one calendar year. In calculating the number of days an individual is present in the PRC, temporary absences from the PRC may not be excluded. A temporary absence is defined as a single absence from the PRC for a period of no longer than 30 days, or as multiple absences from the PRC for an aggregated of no longer than 90 days.

Individuals who are considered one to five-year tax residents are subject to PRC individual income tax on income earned in the PRC and on foreign income remitted to the PRC during the period of residency.

Individuals who maintain a permanent home in the PRC and those residing in the PRC for five years or longer are subject to PRC individual income tax on world-wide income, regardless of whether the income is remitted to the PRC.