Taxation

Whether Hong Kong residents’ income in the Mainland is taxable depends on the circumstances. It is important to first understand the basic concepts of “resident” and “domicile”.

Pursuant to the relevant Mainland laws, an individual who has a “domicile” in China or an individual who does not have a “domicile” but has resided in China for a cumulative period of 183 days or more in a tax year is defined as a “resident”. An individual who neither has a “domicile” nor resides in China or an individual who does not have a “domicile” and has resided in China for a cumulative period of less than 183 days in a tax year is defined as a “non-resident”.

In the Individual Income Tax Law, “domicile” is a specific concept, which does not refer to a residence in physical form. Having a “domicile” in China means habitually residing in China because of household registration, family or economic interests. Those who reside in China for study, work, visiting relatives, travel, etc., i.e. not habitually residing in China, are considered as not having a “domicile”.

For Hong Kong residents defined as “non-residents” who reside in the Mainland for a cumulative period of not more than 90 days in a tax year, their wages and salaries earned in the Mainland that are paid by employers outside the Mainland are exempt from “individual income tax”.

For Hong Kong residents who reside in the Mainland for a cumulative period of more than 90 days but less than 183 days in a tax year, their wages and salaries earned from work in the Mainland are subject to “individual income tax”. As far as Hong Kong residents are concerned, any stay of 24 hours in the Mainland will count as a day of residence in the Mainland, while any stay of less than 24 hours will not count as a day of residence in the Mainland.

For Hong Kong residents who reside in the Mainland for a cumulative period of more than 183 days in a tax year, they are defined as “residents” and are thus required to pay “individual income tax” on wages and salaries earned from work in the Mainland, regardless of whether the wages and salaries are paid by employers within or outside the Mainland. In addition, these individuals should pay “individual income tax” on their wages and salaries deriving from sources outside the Mainland that are paid by employers in the Mainland.

Besides, for individuals who have resided in the Mainland for a cumulative period of 183 days or more per year for six consecutive years or more, they are required to pay “individual income tax” on their wages and salaries earned from sources outside the Mainland and paid by workplaces or individuals outside the Mainland. In regard to “six consecutive years”, 2019 is taken as the starting point, and the years of residence in 2018 or before are not counted.

The tables below provide an overview of circumstances where “individual income tax” is payable or non-payable:

Table 1

Duration of residence in the Mainland		Income deriving from wages and salaries earned from work in the Mainland		Income deriving from wages and salaries earned from work outside the Mainland
		Paid or borne by employers in the Mainland	Paid or borne by employers outside the Mainland	Paid or borne by employers in the Mainland	Paid or borne by employers outside the Mainland
Non-residents	≤ 90 days	Taxable	Non-taxable	Non-taxable	Non-taxable
	> 90 days and  < 183 days	Taxable	Taxable	Non-taxable	Non-taxable

Table 2

Duration of residence in the Mainland		Income deriving from wages and salaries earned from work in the Mainland		Income deriving from wages and salaries earned from work outside the Mainland
		Paid or borne by employers in the Mainland	Paid or borne by employers outside the Mainland	Paid or borne by employers in the Mainland	Paid or borne by employers outside the Mainland
Residents without a domicile	≥ 183 days and ≤ 6 years	Taxable	Taxable	Taxable	Non-taxable
	6 years (7th year ≥ 183 days)	Taxable	Taxable	Taxable	Taxable

For enquiries about personal taxation status, please log in the “Individual Income Tax”APP, call the enquiry hotline at 86 + (local area code) + 12366, or bring along relevant documents to taxation offices for assistance.

At present, the nine Mainland cities of the Greater Bay Area provide tax relief to non-Mainland (including Hong Kong, Macao and Taiwan) high-end talents and talents in short supply working in the cities by offsetting the “individual income tax” differential between Hong Kong and the Mainland, and such tax relief is exempt from “individual income tax”. The specific verification and implementation measures for high-end talents and talents in short supply are determined by individual cities in light of the actual circumstances. Preferential policies on “individual income tax” for high-end talents and talents in short supply implemented in Guangzhou and Shenzhen can be found at:

http://www.cnbayarea.org.cn/service/tax (Chinese only)

Moreover, certain Mainland cities/regions of the Greater Bay Area may offer sector-specific tax incentives or implement the policy of “Hong Kong taxation for Hong Kong people”. For example, as stated in the Notice in relation to Measures of Preferential Individual Income Tax Policy in the Nansha District of the Guangzhou Municipality issued by the Ministry of Finance and the State Taxation Administration (Cai Shui [2022] No. 29), Hong Kong residents working in Nansha, Guangzhou are exempt from paying the portion of “individual income tax” that is in excess of the amount of tax payment they are subject to in Hong Kong. For details, please contact the relevant local authorities.