appConfigEntityId

bodyType

customContents

entityId

entityUuid

isVideo

articlePageQuery

article

articleSchemaContent

content

hooksArticlePageAdvertisementConfigArticle

hooksArticlePageFloatingButtonConfigArticle

appConfig

filter

json

liveArticle

Zhu Wenqian

China’s tax authorities announced on Tuesday that the country would end the tax exemption for dividends earned by expatriates at foreign-funded firms, setting a 20 per cent rate effective immediately.
The measures mainly target “interest, dividend and bonus income” for individual income tax purposes, according to a joint statement from the Ministry of Finance and State Taxation Administration.
State news agency Xinhua said the change was needed for the “unification of the tax system”.
In 1994, China put in place a tax exemption on dividend and bonus income that foreign individuals earned from foreign‑invested enterprises. At the time, the measure was designed to advance reform and opening‑up and draw foreign investment.
A tax‑service hotline representative said that because the guideline was newly issued, immediate confirmation was not available on whether the new rule would cover individuals in Hong Kong, Macau and Taiwan, or foreigners living overseas.
“This change upholds fairness in the tax system. Previously, foreign investors received tax‑exempt dividends while Chinese investors paid tax. Such differential treatment runs counter to the principle of tax neutrality,” said Fu Yifu, a special research fellow at Su Merchants Bank in Nanjing, in China’s eastern Jiangsu province.
“Foreign investors in China value comprehensive strengths such as its rule‑of‑law environment, market size and industrial support, not merely a handful of tax incentives. Phasing out these remaining differential treatment policies will foster a more efficient, well‑regulated unified market system,” Fu said.
The latest measure comes amid a raft of initiatives that Beijing has rolled out in recent months to tighten oversight of cross-border financial flows, aimed at curbing tax avoidance and capital flight.
China announced new rules in July, bringing income generated through offshore trusts under its personal income tax regime, closing a loophole that had enabled wealthy Chinese households to shield large sums of income from taxation.
With a unified national market taking shape, China is progressively regulating preferential tax policies.
“In past practice, some domestic firms rebranded as foreign‑invested enterprises to siphon profits via large dividends and access tax-exempt benefits, causing tax revenue losses. The new rule has fully closed such arbitrage opportunities,” Fu said.
In addition, if their tax residence country allowed tax credits, taxes that foreign individuals pay in China could offset their local tax liabilities. Their overall tax burden therefore might not rise materially, Fu added.
According to the new guideline, foreign‑funded enterprises would need to withhold and remit tax when paying dividends and bonuses to foreigners, and the foreign firms would file tax returns within 15 days of the month after payment, the statement said.
If the enterprise failed to withhold taxes, the foreign individual receiving dividends would be required to pay the tax on or before 30 June of the following year. If tax authorities issued a time-limited payment notice, the foreign individual would be required to comply with that deadline, it added.


China needs US-style immigration policy to win tech rivalry with Washington: expert

Hong Kong’s new training visa could be available in first quarter of 2027

China ends dividend tax exemption for expats, applying 20% rate

Shanghai aims to quintuple tax-free merchandise sales to foreign tourists within 5 years

Foreigners in China

Yuan banknotes photographed in Fuyang City, Anhui province, China on April 9, 2026. Photo: CFOTO/Future Publishing via Getty Images

Goldman Sachs upbeat on wealth outlook despite worries over China’s tax scrutiny

People walk past buildings in Central, Hong Kong. Photo: Sun Yeung

China’s wealthy used grey zones to avoid taxes. Have new rules painted them into a corner?

Illustration: Lau Ka-kuen

As mainland China tightens its tax rules, can Hong Kong remain a magnet for billionaires?

 Illustration: Dennis Yip

Could China’s new trust tax pull Pan Shiyi’s wealth into the capital flight spotlight?

Pan Shiyi, who lives in New York, is one of China’s most closely followed entrepreneurs. Photo: Dickson Lee.

Zhang Xin (left) and Pan Shiyi founded Soho China in 1995. Photo: Handout

Beijing says 20% offshore insurance tax not new – and does not target Hong Kong

The share prices of major financial firms in Hong Kong dipped on Thursday, after reports of that Chinese authorities had started levying a 20 per cent tax on gains from offshore insurance policies. Photo: SCMP/Sam Tsang

Business

China Business

The exemption previously enjoyed by overseas nationals on gains from foreign-funded firms in China was cancelled in an announcement on Tuesday


The exemption previously enjoyed by overseas nationals on gains from foreign-funded firms in China was cancelled in an announcement on Tuesday.


Wealth management

China

China ends dividend tax exemption for expats, applying 20% rate

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The exemption previously enjoyed by overseas nationals on gains from foreign-funded firms in China was cancelled in an announcement on Tuesday

The exemption previously enjoyed by overseas nationals on gains from foreign-funded firms in China was cancelled in an announcement on Tuesday