A recent article in The New York Times claimed incorrectly that since the 1990s, China has had American-style laws to tax the non-Chinese income of all Chinese citizens who have moved abroad, and is now enforcing those laws. China Daily has rebutted The New York Times‘ statement, but misinformation continues to spread like wildfire around the Internet — one particularly hilarious magazine is now even claiming that China invented FATCA in 1993, more than a decade before Richard Harvey did. In my previous post I translated the relevant laws and regulations proving that The New York Times is incorrect. In this post I provide further translations of Chinese source materials to correct these misconceptions.
First, I quote a book by a Chinese professor of accounting confirming that a Chinese emigrant (i.e. a person who has emigrated, but remains a Chinese citizen) is not a Chinese tax resident and thus is only subject to Chinese tax on mainland China-source income. Afterwards, I look into the historical background of some (non-tax) regulations defining exactly who qualifies as a “Chinese emigrant”.
Primarily, I discuss a November 2014 notice in which China’s State Administration of Taxation have stated, with reference to that definition, that a Chinese emigrant temporarily working in mainland China can qualify for a tax deduction given to residents of mainland China who are not domiciled there. This clearly confirms the tax authority’s view that not all Chinese citizens have Chinese domicile, and means that these Chinese citizens would not be Chinese tax residents when they live outside of mainland China.
Finally, on 11 January I added some one more section to this post (rather than make a fourth post on the subject of Chinese taxation): an October 2014 article in a State Administration of Taxation publication about the detailed process of determining the domicile of Chinese citizens who have residence abroad but return to China temporarily for work.