Tax Residency for Foreigners: The 183-Day Rule and the Six-Year Rule

China Field Notes · by Daona · 13 min read

Ask a group of foreign managers in Shanghai how China taxes them and you will hear confident, contradictory answers. "After 183 days you pay tax on everything." "No, only after five years." "Arrival days don't count." "My company handles it." Some were true under the old rules, some are half true, and "my company handles it" is only true for the part of your income your Chinese employer pays.

China's individual income tax (个人所得税, IIT) has used its current framework since 1 January 2019. For foreigners, the details sit in a March 2019 announcement of the Ministry of Finance and the State Taxation Administration on individuals without domicile — Announcement No. 34 (财政部 税务总局公告2019年第34号).

You are a tax resident (居民个人) for a tax year if either:

· you have a domicile (住所) in China — you habitually live here because of household registration, family or economic interests. Almost no foreigner on a work visa is treated as domiciled; or

· you have no domicile but spend 183 days or more in China in the calendar year.

Otherwise you are a non-resident (非居民个人).

What "China-source" means for wages

Salary for work performed in China is China-source income, wherever it is paid. If your home company keeps paying you abroad while you work in Shanghai, those working days still produce China-source income. Money paid into a foreign account is not outside the Chinese system if the work was done here.

Since 2019, only full days count. A day on which you stay in China for a full 24 hours counts; a day with less than 24 hours does not. Your arrival and departure days usually do not count.

You land in Beijing at 10:00 on Monday and fly out at 18:00 on Friday:

Weekly commuters may be physically present for more than half the year and still count fewer than 183 days. Someone who lives here and takes a few holidays passes 183 easily.

Mainland only. Days in Hong Kong SAR, Macao SAR and Taiwan region do not count. A same-day trip from Shenzhen to Hong Kong breaks the 24 hours for that day.

Keep your own record: date and time of every entry and exit, flight or train number, passport stamps. The National Immigration Administration's services and the 12367 hotline can provide an entry–exit record (出入境记录).

Before 2019, foreigners became taxable on worldwide income after five full years. The 2019 reform replaced this with the six-year rule.

Filing. The IIT implementing regulations make the exemption subject to record filing with the competent tax authority (向主管税务机关备案), usually handled with the annual reconciliation or by your employer's tax agent. Confirm it has been made and keep a copy.

Not covered by the exemption:

· Salary for work done in China — always taxable

· Foreign-source income paid by a Chinese entity

· Years as a non-resident — only China-source income is taxed anyway

The clock in practice

Illustrative. Does not refer to any real person.

This manager is still within the exemption in 2026. If 2027 and 2028 also qualify, 2029 would be the first year of worldwide taxation. One holiday of more than 30 days before then resets the clock again.

The 90-day rule (domestic law). A non-resident in China for no more than 90 days in a tax year is exempt on China-source wages paid by an overseas employer and not borne by its Chinese establishment.

The treaty 183-day rule. Under most of China's tax treaties, wages for work in China are taxable only at home if you are here no more than 183 days in the treaty's period, the employer is not Chinese resident, and no Chinese permanent establishment bears the cost. Some treaties count by calendar year, some by any 12 months — check yours.

Both fail if your salary is recharged to a Chinese company, for example through a management fee. Settle this before the assignment starts.

Wages, personal-service remuneration, author's remuneration and royalties form comprehensive income (综合所得), taxed annually:

Taxable income = gross comprehensive income − ¥60,000 basic deduction − employee social insurance and housing fund − special additional deductions − certain other items.

Annual bonus. A resident's annual one-off bonus can be taxed separately, at the rate for one-twelfth of the bonus — also extended to 31 December 2027. Your payroll provider can run both calculations.

Dividends from a foreign-invested company. Since 1 September 2026, dividends foreign individuals receive from foreign-invested enterprises are no longer exempt; they are taxed at 20%, withheld by the paying company. See Issue 15.

A foreign manager, resident all year, one child at an international school, renting a flat. Package ¥960,000. Social insurance and other deductions ignored for simplicity.

Illustrative. Does not refer to any real person.

Reimbursed allowances save this manager ¥69,300 a year — if the reimbursements are real, reasonable and backed by fapiao. With modest housing costs and no school fees, the deductions may be just as good. From 2028, unless extended, Option A disappears. Start redesigning packages in 2027.

Monthly withholding. Your Chinese employer is the withholding agent (扣缴义务人): it withholds monthly on a cumulative basis and files by the 15th of the following month.

Annual reconciliation (年度汇算). Residents settle the year from 1 March to 30 June of the following year, through the IIT app (个人所得税App), the online tax service, the employer or a licensed tax agent. File if you owe more (beyond a small threshold), want a refund, or had income not withheld — such as foreign-source income outside the six-year exemption. For tax year 2025, the window was 1 March–30 June 2026, with appointments in early March.

Foreign tax credit. Tax paid abroad on income also taxed in China can be credited, up to the Chinese tax on that income, with proof of payment.

Keep the day count yourself. Payroll sees your salary, not your flights. A one-page log of entries and exits, updated monthly, is your most useful tax document.

Plan the 30-day trip consciously. If you have significant income abroad, one trip out of China of more than 30 days in a year keeps the six-year clock from reaching six. Plan it, document it, and don't split it by mistake.

Settle cross-charges before the assignment. Short-term exemptions fail if salary is recharged to the Chinese company.

Treat 2027 as the last planning year for allowances. Model the 2028 position now.

"After 183 days I pay tax on everything." You become a resident. Worldwide taxation only follows six consecutive qualifying years.

"Salary paid abroad isn't taxed in China." Work done in China is China-source, wherever it is paid.

"My arrival day counts." Only full 24-hour days count.

"Several short trips reset the clock." Only one single trip over 30 days, or a year under 183 days.

"I can have both the allowances and the deductions." One or the other each year, until end-2027.

"The company files everything for me." It withholds on what it pays. Foreign-source income, refunds and the six-year filing are yours, even if a licensed agent prepares the return.

Rules as of October 2026. This column provides general information, not tax advice. Your tax position depends on your own facts; tax returns and filings should be prepared by your employer's payroll team or a licensed tax professional. Licensed firms' fees are settled by the client at cost.

China Field Notes · by Daona