The Ministry of Finance (MOF) on Saturday announced a favorable tax policy for overseas talent working in the Guangdong-Hong Kong-Macao Greater Bay Area.
Based on the individual income tax differentials between the Chinese mainland and Hong Kong, high-end talent and professionals from Hong Kong, Macao, Taiwan and other parts of the world working in the Greater Bay Area, and with skills that the country is short of, will get subsidies from Guangdong Province and Shenzhen City to offset the differentials.
The Shenzhen government, along with the Guangdong Provincial Government, will develop the specific regulations for identifying talent and providing subsidies, the document added.
The subsidies will be exempt from paying individual income tax.
The policy, effective from January 2019 to the end of 2023, applies to nine cities in Guangdong — Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing — the ministry said.
It said the move aimed to encourage the development of the Greater Bay Area, which covers an area of 56,000 square km and had a combined population of about 70 million at the end of 2017.
In February, the State Council released a broad set of goals for the Greater Bay Area to be reached by 2035.
Also on Saturday, China announced specific rules concerning tax exemption to reduce the amount of individual income tax (IIT) paid on income earned overseas.
According to the rules jointly unveiled by the Ministry of Finance and State Taxation Administration (STA), individuals who have lived on the Chinese mainland for six consecutive years and have stayed here for 183 days or more each year will need to pay IIT on their overseas-sourced income.
Otherwise, their incomes earned overseas will be IIT exempt.
The clock for the six-year period will be reset if the individual leaves the mainland for more than 30 consecutive days in a year, according to the rules.
The rules, coming into effect Jan. 1, also stipulated that a stay of less than 24 hours on the mainland will not be counted as a day, and the count started from Jan. 1 this year.
The adjustment marked more generous tax exemptions on overseas-sourced incomes of foreigners and nonmainland citizens working on the mainland.
The move will attract more foreign investment and overseas talent to work on the mainland, the STA said in a statement on its website.
Previously, the exemption was for taxable residents who had lived on the mainland for less than five years.