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China's global taxation shocks overseas Chinese

 

　　On July 10, Bloomberg revealed a blockbuster news that shocked countless high-net-worth individuals in China. The Chinese government began to tax citizens' global income. It means that the Chinese government has started to follow the example of the US government to implement a tax policy of "no matter where you work in the world, you must pay taxes to me". Perhaps because the clues related to the mutual disclosure of CRS have been collected, if the above report is true, then the Chinese government will orderly implement global taxation on the overseas income of Chinese tax residents.

 

　　For many years, many Chinese people have formed a mindset that they do not need to pay taxes for the money they make abroad. Now that I suddenly heard that I need to pay taxes, many people who work and live overseas, as well as people who own businesses overseas, are surprised.

 

2

Chinese working in Hong Kong, Macau and other places will pay taxes to the mainland

 

　　This policy not only levies taxes on the income of Chinese citizens abroad, but also levies taxes on their income from work in Hong Kong and Macau. According to the South China Morning Post, there are 80,000 to 150,000 mainlanders working in Hong Kong. According to the Nikkei Asian Review, Chinese citizens working in Macau have also been told that they need to start paying personal income tax in the country. Chinese state-owned enterprises in other places such as Singapore have also begun to issue the same tax notice to their employees. In other words, even if this policy currently only affects overseas Chinese in Hong Kong, Macau and other places, it will affect at least a hundred thousand people.

 

　　Hong Kong has one of the lowest tax rates in the world, and this is also an important reason for attracting various enterprises and talents to settle in Hong Kong. Nowadays, Chinese state-owned enterprises operating in Hong Kong have recently begun to require mainland Chinese people to report their income in 2019 so that they can pay taxes in their home country. The maximum tax payment for these people in Hong Kong is 15% of their income, while the maximum tax rate in China is 45% (with deductions). This means that they may pay three times the original tax.

 

　　Including tax deductions, the highest personal income tax rate in China is 45%. Once people working overseas or those who have overseas industries need to pay taxes, the amount of money involved is very huge.

 

3

China's personal tax development history

 

　　As early as the end of 2018, China revised its personal income tax law and it came into effect on January 1, 2019. According to the "Personal Income Tax Law of the People's Republic of China", an individual who has a domicile in China, or has no domicile and has lived for 183 days in a tax year, is a resident individual. Resident individuals are required to pay personal income tax for income obtained from within and outside China.

 

　　Global asset allocation without overseas status is a false proposition. Both domestic and overseas have specified that Chinese tax residents need to pay taxes to China on their global income. So if you do not live in China, how to define a domicile? The State Administration of Taxation explained that Article 2 of the "Implementation Regulations of the Individual Income Tax Law of the People's Republic of China" has related statements: "Having a domicile in China means habitual residence in China due to household registration, family, and economic interests." Individuals who live abroad for reasons such as study, work, family visits, travel, etc., still return to live in China after these reasons are eliminated, China is the taxpayer’s habitual residence, that is, the individual has a domicile in China.

 

　　In summary, the key to determining tax resident status is "habitual residence." For those who have not obtained permanent residency or nationality in a foreign country, they are living abroad only for work reasons. After this reason is eliminated, they will still return to live in the mainland, so they will be regarded as having a residence in the country, thus becoming a Chinese tax Residents. It is precisely because of this status that they need to declare and pay personal income tax in the Mainland for income obtained in countries or regions other than the Mainland, which is global taxation.

 

　　According to the above explanation, many expatriates are individuals who have domiciles in China.

 

　　In January last year, China revised its income tax regulations to help relevant authorities begin to levy taxes on its global citizens, similar to the US levying taxes on Americans living abroad. But the Chinese government only released detailed instructions on how to file tax returns this year, which caught many people off guard. This policy not only imposes taxes on personal income, but also stipulates that dividends and property sales are also taxed. Many companies have to bear many additional tax burdens or bear the risk of leaving Chinese employees.

 

　　In the post-epidemic era, the global demand for dual citizenship and investor visas will increase. Although Bloomberg's fax seeking comment did not receive a reply from the State Administration of Taxation, Singapore Hengsheng Group speculated from the past development process, and from the current international situation, this situation is not a catch.

 

4

High-net-worth individuals urgently need identity planning

 

　　In this era, the second passport ranges from luxury goods to necessities. In theory, Chinese citizens have been obliged to pay taxes on their global income for many years. It's just that this natural rule has not been implemented for a long time. Today, China will also truly enter the ranks of global taxation countries. How to make tax planning and how to plan family membership is a forward-looking strategic issue, which will directly affect the protection and inheritance of wealth.

 

　　Under the trend of globalization of asset allocation, obtaining identities in different countries has become a must for high-net-worth individuals to travel freely and maximize capital gains. At the same time, not giving up to tap opportunities in China's sustained economic growth, while hoping to enjoy overseas life, education and other high-quality resources is exactly what many investors need. The Grenada National Tourism Resort project perfectly meets the needs of Chinese investors. Grenada is a treaty country for the U.S. E2 visa, and the United States is directly responsible for its defense. At the same time, Grenada is a Commonwealth country, and the Queen of the United Kingdom is the head of state. Recently, Grenada Foreign Minister Peter Charles David mentioned in a public speech that Grenada is expected to be exempted from visa Canada. Grenada has its roots and enjoys the preferential treatment of major countries such as China, the United States, and the United Kingdom. All this makes Grenada one of the more special countries in the world.

 

　　Grenada's national key development project-Grenada National Tourism Resort, is Grenada's largest foreign investment project. It aims to enhance Grenada's international tourism image and play a core driving role in driving the development of Grenada's tourism economy. The project is located in the northeast of Grenada, with a planned area of ​​nearly 3,000 acres and an investment amount of more than 2.2 billion US dollars. In August 2019, the Grenada National Tourism Resort project became an investment citizenship project approved by the Grenada government, allowing investors to adopt equity investment The project obtained Grenada citizenship for the whole family, providing investors with a convenient, fast and safe overseas identity investment opportunity.