September 2017 - A Recent Individual Income Tax Case Relating To Expatriates In China

It has been mentioned by Local Tax Authorities that significant efforts would be put in enforcing compliance in individual income tax, in particular towards the foreign expatriates working in China.

Recently, the Beijing Local Tax Authority had launched an investigation on a Chinese subsidiary of a Fortune 500 Company, focusing on individual income tax of the expatriates.  The triggering point for the investigation is that the quantum of fringe benefits provided to these expatriates far exceeds that of expatriates of comparable entities in the industry.  The back taxes and penalties imposed on the Chinese subsidiary are well over RMB 28 million.