Tax Rates in China
for Expats 2026

Income Tax Brackets (2024)

China applies a 7-bracket progressive tax system on individual income. Non-residents are taxed only on China-source income; residents (physically present 183+ days) pay tax on worldwide income. Brackets are annual thresholds; the special allowances below can reduce taxable income before applying these brackets.

*Conversion for reference only; actual tax is calculated in CNY. Exchange rate as of April 2026.

Corporate Tax

China applies differentiated corporate tax rates based on enterprise type and technology status. The standard rate is 25%, but qualifying high-tech enterprises (HNTE) and small low-profit enterprises benefit from reduced rates. Dividend withholding tax on distributions to foreign shareholders is 10% (may be reduced by bilateral treaty to 5%).

VAT & Consumption Taxes (3-Tier System)

China's VAT system is unique globally: goods are taxed at 13%, construction, agriculture, transportation, and basic utilities at 9%, and services at 6%. Businesses can claim input VAT credits on purchases supporting taxable sales. The fapiao (formal invoice) system is critical for deductions — without proper invoices, VAT credits cannot be claimed. Registration threshold is CNY 500,000 annual turnover for goods or CNY 300,000 for services.

Key Requirement: VAT refunds for exports and input credit claims require valid fapiao invoices. Without them, no deductions are allowed. This is a critical operational requirement for businesses and expat freelancers operating in China.

Capital Gains & Investment Income

China's capital gains tax treatment is nuanced. Gains on stocks traded on secondary markets (Shanghai and Shenzhen exchanges) incur zero tax for individuals in most cases; however, primary market IPO gains may be taxed. Other capital gains (property, bonds, OTC securities) are generally taxed as ordinary income at a flat 20%. Dividends from listed companies have preferential rates based on holding period: 20% if held less than 1 month, 10% if held 1–12 months, and 5% if held over 12 months. Some domestic investment funds receive 0% tax on certain conditions.

Expats investing through a China brokerage account are subject to these rates if they meet residency criteria (183+ days in China in a tax year = resident). Non-resident expats pay tax only on China-source investment gains.

Social Security for Expats

Since 2011, foreign employees working in China are required to contribute to the Chinese social security system, comprising pension, healthcare, unemployment, work injury, and maternity insurance. The employee contribution rate is approximately 10.5% of gross salary, while employers contribute ~28% (rates vary slightly by city: Beijing, Shanghai, Shenzhen, and others have different structures). Some countries have bilateral social security agreements with China that exempt certain foreign employees from contributions or allow them to opt out with proof. Key countries include Germany, France, South Korea, Japan, Canada, and Australia. Expats should verify their home country's bilateral status with the local tax authority.

Bilateral Exemptions: Expats from countries with bilateral social security agreements (Germany, France, South Korea, Japan, Canada, Australia, etc.) may be exempt from contributions. Proof of coverage in home country and bilateral agreement documentation is required. Non-exempt expats contribute for the duration of their employment; benefits are limited if they leave China.