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Global Mobility Service

Global Mobility (“GM”) refers to the movement of people, talent and resources across borders for various purposes, including global job rotations, education and lifestyle choices.
 
In an era of globalisation, enterprises increasingly leverage GM to drive business growth, expand markets and enhance competitiveness. GM encompasses a wide range of activities and policies that facilitate and manage international mobility. A key consideration for both individuals and enterprises involved in GM is tax implications, which can be complex due to different tax treatments across jurisdictions, potential double taxation and compliance requirements.

Tax compliance in China is often a major hurdle for foreign enterprises, with tax laws in Chinese and vast differences in tax treatment, filing and payment procedures, depending on the business activity and location of business. Having a reliable tax agent can save you significant time and money as well as the hassle of navigating the complex tax systems and regulatory framework.

Firstly, businesses need to distinguish the tax administrative bodies that they have to deal with, for example, the state tax bureau on corporate income taxes and the local tax bureau on individual income taxes.

We can guide you through the maze and avoid late filings and inconsistencies in reporting, which can attract penalties and surcharges.

 

Corporate Income Tax

  • Corporate income tax compliance health check
  • Monthly / quarterly corporate income tax filing
  • Annual corporate income tax assessment
  • Transfer pricing documentation preparation
  • Special tax declaration

 

Value-added Tax

  • Value-added tax compliance health check
  • Value-added tax and surtax filing


Transfer Pricing

  • Transfer pricing contemporaneous documentation
  • Country-by-country reporting

 

Individual Income Tax

  • Individual income tax compliance health check
  • Monthly individual income tax filing
  • Annual individual income tax assessment
  • Individual income tax backlog filing
  • Tax registration and filing for stock option income
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Employment Arrangements

Many enterprises implement GM programs to relocate employees internationally, facilitating business expansion and oversight. These arrangements may include:
 
  • long-term job assignments
  • short-term rotation plan
  • international remote work arrangements
 
When structuring GM programs, enterprises must navigate tax regulations while also considering immigration laws. Different countries have distinct visa requirements, residency policies and work permit rules that impact employee mobility.
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Complex PRC Tax Environment

Although China's tax policies are centrally governed, local tax authorities may interpret regulations differently, creating potential risks for businesses deploying employees in or out of China. Ensuring compliance with PRC tax regulations, including reporting requirements, tax withholding obligations and the application of double tax agreements (DTAs), is essential.

Key Tax Considerations in China:

  • PRC Tax Residency Rules and Implications:

The identification of tax residents in China should be assessed based on GM arrangement and physical presence. If an expatriate stays in China for more than 183 days within a full calendar year, he or she will be categorised as a China resident taxpayer. Otherwise, shall be deemed as non-resident taxpayer.

Regardless of Chinese citizen or expatriates, including resident taxpayer and non-resident taxpayer, the employment incomes earned during the period of time in which they work in China are regarded as China-sourced income regardless of whether the payments are made within or outside China.  The deemed China-sourced income is subject to China IIT due to either it is borne by any China entities or the expatriate’s stay in China exceeds a certain time threshold according to the tax treaty between China and the home country of expatriate.

  • Double Tax Agreement (DTA):

Over 3,000 treaties exist globally to prevent double tax and provide clarity on tax obligations. The purpose of DTA is to provide relief by allowing tax credits or exemptions to avoid double taxation between home country and host country. For example, if a Chinese citizen is assigned overseas for job rotation, he or she is still required to complete the PRC annual IIT declaration on their worldwide income, including overseas salary income, while the tax credit can be applied to offset paid IIT in the host country to avoid double tax.

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Tax Costs of Globalisation Strategies

When implementing globalisation strategies, enterprises often need to deploy key employees to overseas markets to drive business expansion. However, the complexities of IIT management can lead to significant tax costs for both the enterprises and employees.
 
On one hand, employees are often concerned about their “net income” and double taxation issues under the GM arrangement.  Although DTAs exist between countries, properly applying these agreements remains a highly technical challenge in mitigating the actual “additional” tax burden on employees. Enterprises need to provide reasonable tax optimisation solutions to ensure that employees' net income is not excessively impacted while offering appropriate benefits to maintain motivation, all while ensuring enterprises do not incur excessive costs.
 
On the other hand, GM involves a large volume of employee data, including payroll, benefits, tax information, and more.  Enterprises must ensure the accuracy and timeliness of this data to meet local reporting requirements. Managing and reporting employee data can be challenging, and errors or omissions may lead to tax risks. Under the Base Erosion and Profit Shifting (BEPS) framework promoted by the Organisation for Economic Cooperation and Development (OECD), tax authorities have heightened their compliance demands regarding cross-border taxation.
 
Against the above, managing IIT has become a critical component of GM strategies for enterprises.  With our extensive experience and one-stop service approach, we are dedicated to helping enterprises optimise IIT management, mitigate compliance risks and enhance employee satisfaction. Through our services, enterprises can focus on their core business and maximise the value of global talent mobility. If you would like to learn more about our Global Mobility services, please feel free to contact us, and we will provide you with tailored solutions.

Global Mobility - Case Sharing

 

Accounting

Background
As you may be aware, more and more foreign companies are deploying their key employees or management to China to handle the Chinese market for business expansion. Both individuals and companies are highly concerned about the PRC tax implications, particularly for IIT, to balance the personal benefits under GM arrangement.
 
Our experience 
Recently, we received an inquiry from a client who was seeking tax equalisation services to assist in addressing IIT issues, ensuring that the seconded employee maintains the same level of net income as before, enabling a smooth execution of the GM arrangement. Below are the key considerations we supported for the tax equalisation planning:
 
  1. Understanding of client’s GM arrangement
  2. Introduction of prevailing PRC IIT law/regulations
  3. Design of benefit and compensation package to achieve tax equalisation
  4. IIT quantification based on the confirmed GM arrangement
 
In response to the above, we provided a tailor-made IIT planning service to ensure the employee's IIT declarations in China are fully compliant with PRC tax requirements, while also achieving tax equalisation.

The global mobility presents significant opportunities for businesses, yet it also comes with intricate tax challenges. If you wish to learn more or require a tailored solution to meet your specific needs, please feel free to contact us. Our team of experts will provide you with comprehensive services to ensure seamless integration and efficient management in the process of globalization.

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