# Expat Taxes in China: IIT and the Six-Year Rule Explained > How China's six-year rule, IIT brackets, expat allowances, and 2026 annual reconciliation work. A practical tax guide for foreigners living in China. **URL:** https://migaku.com/blog/language-fun/expat-taxes-in-china-iit-and-the-six-year-rule-explained **Last Updated:** 2026-05-26 **Tags:** culture, resources, deepdive --- If you are a foreigner working in China, the country's Individual Income Tax (IIT) system taxes you on China-source income from day one, but only pulls your worldwide income into the net once you trigger the six-year rule. Understanding how that clock works, and how to legally reset it, is the single most important tax planning task for any long-term expat in 2026. *Last updated: May 26, 2026* ## How China Taxes Foreign Residents China's IIT regime, governed by the Ministry of Finance and the State Taxation Administration (STA), assigns foreign individuals to one of three categories based on physical presence in a calendar year: - Under 183 days in China: taxed only on China-source income. - 183+ days, but fewer than six consecutive qualifying years: taxed on China-source income plus any foreign-source income paid or borne by a China entity or individual. - 183+ days for six consecutive qualifying years (with no single break of more than 30 days): taxed on worldwide income starting from the seventh year. A further short-stay exemption exists for individuals employed by an overseas employer with no permanent establishment in China: if you spend no more than 90 days in China in a calendar year, your foreign-employer income is exempt. Under most applicable double-tax treaties, that 90-day threshold is extended to 183 days. A day counts toward the 183-day threshold only if you are physically present in China for a full 24 hours. Days when you arrive or depart, and therefore stay less than 24 hours, do not count. This rule has been in force since January 1, 2019. ## The Six-Year Rule in Detail The six-year rule is set out in Ministry of Finance and STA Announcement No. 34 of 2019, formally titled the *Criteria for Determining the Residency Period of Individuals without Domicile in China*. The mechanics are: 1. The clock counts only consecutive years in which you are physically present in China for 183 days or more. 2. The clock officially started on January 1, 2019. Years of residence before 2019 do not count. 3. If, during any year in the window, you take a single trip outside China lasting more than 30 consecutive days, the six-year count resets to zero. 4. Splitting absences into multiple shorter trips does not reset the clock. The 30+ day break must be one continuous trip. 5. Once you complete six consecutive qualifying years, from the seventh year onward your worldwide income becomes taxable in China, as long as you remain a tax resident that year. Because the count only began in 2019, foreign-source income paid by foreign parties was effectively exempt for all non-domiciled individuals through tax year 2024. Tax year 2025 is the first year in which worldwide-income taxation can actually be triggered. Any expat who has lived in China continuously since 2019 without a 30+ day break should review their position carefully in 2026 to decide whether to take a qualifying break before the end of 2026, which would reset the clock and protect their foreign income going forward. ### Worked example - Anna, a German national, arrived in Shanghai in February 2019 and has stayed 183+ days every year since, with her longest absence being 21 days. - 2019, 2020, 2021, 2022, 2023, 2024: six consecutive qualifying years. - From 2025 onward, her worldwide income is in scope for China IIT. - If, instead, Anna had spent 31 consecutive days outside China in 2023, her clock would have reset, and the count would have restarted in 2024. ## IIT Rates and the Standard Deduction China applies progressive rates from 3% to 45% across seven brackets to annual comprehensive income (wages, salaries, labor service income, author's remuneration, and royalties combined). A standard deduction of RMB 5,000 per month, or RMB 60,000 per year, is applied before the brackets kick in. | Annual taxable income (RMB) | Rate | |---|---| | Up to 36,000 | 3% | | 36,000 to 144,000 | 10% | | 144,000 to 300,000 | 20% | | 300,000 to 420,000 | 25% | | 420,000 to 660,000 | 30% | | 660,000 to 960,000 | 35% | | Above 960,000 | 45% | The top 45% rate applies to annual taxable income above RMB 960,000. Business income, capital gains, interest, dividends, and rental income are taxed under separate schedules. ## Expat Allowances vs Special Additional Deductions Non-China-domiciled tax residents must choose, for the entire tax year, between two regimes. The two cannot be combined within the same year. ### Option A: The eight tax-exempt fringe benefits (BIK regime) Under Ministry of Finance and STA Announcement [2023] No. 29, issued on August 18, 2023, the preferential IIT policy on expat fringe benefits has been extended through December 31, 2027. The eight exempt categories are: - Housing rental - Children's education - Language training - Meal allowance - Laundry allowance - Relocation expenses - Business travel costs - Home leave travel The home leave benefit is limited to travel costs for the expatriate alone, between China and the home country, up to two trips per year. Each allowance must be reasonable in amount, documented with valid *fapiao* (official invoices), and structured into the employment contract. ### Option B: Special additional deductions These are the same deductions available to Chinese nationals and, in 2026, include: - Children's education: RMB 1,000 per month per child - Continuing education: RMB 400 per month (up to 48 months) or RMB 3,600 in the year of certification - Housing mortgage interest: RMB 1,000 per month (up to 240 months) - Housing rent: up to RMB 1,500 per month, depending on city tier - Serious illness healthcare: up to RMB 80,000 per year, on actual out-of-pocket expense - Elderly care: RMB 2,000 per month For most well-compensated expats, Option A (the BIK regime) yields a larger tax saving, but the math depends on family situation, housing costs, and city. The preferential annual one-time bonus calculation method, and the Greater Bay Area IIT subsidy for qualified talent, were also extended to December 31, 2027 under the same announcement. ## Annual IIT Reconciliation: Deadlines and Process IIT is withheld monthly by your employer, but residents who stay 183+ days in a calendar year must complete an annual reconciliation to settle the final liability. For tax year 2025, the reconciliation window runs March 1, 2026 to June 30, 2026. - Phase I (March 1 to March 20, 2026): requires a pre-appointment booked via the IIT app. - Phase II (March 21 to June 30, 2026): open without appointment. Reconciliation is technically not required if your prepaid tax exactly matches what is owed, or if the shortfall is RMB 400 or below. If you plan to leave China before the window opens, you can complete the annual reconciliation early at your local tax office. Late-payment interest on overdue IIT is charged at a daily rate of 0.05% on the tax in arrears, with potential additional penalties for non-filing. ### Using the IIT app The official IIT app, 个人所得税 (gèrén suǒdéshuì), is the main filing channel. Foreigners cannot register through facial recognition, so the first step is visiting your local tax office in person with your passport to obtain a Registration Code (注册码, *zhùcèmǎ*). Once registered, you can file the annual return, view prepayment records, and apply for refunds through the app or the e-tax bureau website. ## Document Checklist for the 2025 Reconciliation Before you log in, gather the following: - Passport (the same one used to register, or a record of any passport change filed with the tax bureau) - Work permit and residence permit - Employment contract - Monthly payslips for all of 2025 - Year-end IIT withholding certificate from your employer - *Fapiao* and supporting documentation for any allowances claimed under the BIK regime - Lease contract and landlord ID copy if claiming the housing-rent special additional deduction - Children's school enrollment confirmation if claiming education deductions - Bank account details for any refund (must be a Chinese bank account in your name) - Records of foreign-source income, if you are within the six-year window and the income was paid or borne by a China entity ## Common Pitfalls - Not tracking the 30-day rule precisely. Border-crossing dates are pulled from immigration records. A trip that *feels* like a month may actually be 29 days. Keep a spreadsheet of entry and exit dates. - Assuming pre-2019 years count. They do not. Anyone resident since 2015, for example, only began accumulating qualifying years in 2019. - Mixing BIK allowances and special additional deductions in the same year. You must pick one regime for the full tax year. - **Letting allowances be paid as cash without *fapiao*.** Without proper invoices, the tax bureau will reclassify the amounts as taxable salary. - Forgetting to file before leaving China. If you exit permanently mid-year, settle your IIT with the tax bureau before departure. Unpaid IIT can block future visa renewals and create issues at the border. - Ignoring treaty relief. If you remain tax resident in your home country under a tie-breaker rule, a double-tax treaty may significantly change the calculation. Get professional advice. - Holding non-Chinese investment income while past the six-year mark. Once worldwide taxation is triggered, dividends, capital gains, and rental income from outside China all enter scope. ## Planning Your Six-Year Reset If you arrived in 2019 or 2020 and have not yet taken a 30+ day break, 2026 is the year to plan one. A single continuous trip of 31 days or more outside mainland China, in any calendar year within the window, resets the clock to zero. The trip does not need to be to your home country, and it does not need to be vacation. Remote work from Hong Kong, Singapore, Thailand, or anywhere outside mainland China counts, as long as you remain physically outside the mainland for the full continuous period. For expats with substantial foreign assets, structuring a reset every five years is a routine part of long-term financial planning. For expats who intend to settle permanently, the worldwide-income regime may be acceptable, especially if your home country has a strong treaty with China. ## FAQs Does Hong Kong count as outside China for the 30-day rule? Yes. Hong Kong, Macau, and Taiwan are treated as outside mainland China for the purposes of the 183-day count and the 30-day reset rule. I'm married to a Chinese national. Does that change anything? Marriage alone does not make you domiciled in China. Domicile is based on habitual residence due to household registration, family, or economic ties. Most foreign spouses remain non-domiciled and the six-year rule still applies. Do I owe China tax on my home-country pension? If you have not triggered the six-year rule, foreign-source pension income paid by a foreign payer is outside scope. Once you trigger worldwide taxation, the pension may be in scope, subject to treaty relief. Can I claim the housing-rent special additional deduction if my employer already pays my rent tax-free under the BIK regime? No. You must choose one regime for the entire year. Is the official six-year rule documentation available in English? The authoritative Chinese-language source is MOF/STA Announcement No. 34 of 2019. The State Taxation Administration's English portal at chinatax.gov.cn carries summary guidance, but for binding interpretation always work from the Chinese text or through a licensed tax advisor. For related expat topics, see our guides on [China visa requirements for expats](https://migaku.com/blog/language-fun/china-q1-and-q2-family-reunion-visas-explained-for-2026), [foreigners buying property in China](https://migaku.com/blog/language-fun/can-foreigners-buy-property-in-china-rules-and-process-in-2026), and [where to live in Shenzhen](https://migaku.com/blog/language-fun/where-to-live-in-shenzhen-futian-vs-nanshan-vs-shekou). Navigating the IIT app, reading your withholding certificate, and explaining your situation at the local tax office all happen in Mandarin. If you live in China long enough to worry about the six-year rule, learning the language pays for itself many times over, and [try Migaku](https://migaku.com/signup) is built to help you learn Chinese from the real content you already use.