China Extends Tax Breaks for Foreign Workers Until 2027, Reports Reuters

BEIJING (Reuters) – China has announced the extension of preferential tax policies for foreign nationals working within its borders until the end of 2027, providing much-needed support to foreign companies facing challenges in attracting talent following the COVID-19 pandemic.

In 2022, the government had considered eliminating certain non-taxable allowances for foreign workers, but opted to maintain the program on a review basis until the end of this year.

Foreign chambers of commerce and business associations in China had been actively seeking clarity regarding the continuation of policies that allow expatriates to benefit from tax deductions on expenses like housing, education for children, language training, and other related costs.

Kiran Patel, senior director at the China-Britain Business Council, expressed optimism about the decision, stating, “We believe that this will help to curtail further outflows of qualified international talent, while also providing multinational companies with clarity on their talent strategy regarding the deployment of expatriate staff and structuring of their packages.”

Patel noted that this move signals a genuine commitment from the Chinese government to support multinational firms operating in the country.

As China’s economy experiences a slowdown, authorities have faced difficulties in revitalizing foreign investment, with global companies finding that new incentives fall significantly short of the attractive offers previously extended to draw overseas capital.