Expatriate employees and consultants working in China

China s demand for skilled workers, including from Australia, in their emerging economy is continuing. Australians working in China as employees or as consultants are likely to encounter many cultural but also legal differences, including different tax treatment of their remuneration. Although the taxation of remuneration in China has some similarities with the Australian tax system, there are at least three differences that are worth noting. These differences relate to treatment of residency (referred to in China as domicile rules ) which allow foreigners to pay Chinese tax only on Chinese-source income if the person is resident for less than 5 full years; the more favourable treatment of allowances and bonuses and the tendency to tax foreign workers more favourably than domestic workers. This article considers those differences and notes the pressures that may mean that features of the Chinese personal tax system could change.