Due to the pandemic spread of COVID-19, countries worldwide, including China, have implemented travel restriction policies that have prevented the return of foreign nationals to the workforce. China announced the Temporary Suspension of Entry to Foreign Nationals policy on March 27, which took effect the following day, from March 28, 2020.
This means that foreigners who hold the following visas are currently not allowed to enter China:
APEC business travel card; and/or
As a result, there will be significant changes to the residence days for the tax year 2020 for many expats who work in China. Some expats who were previously working in China may now be stranded overseas and unable to come back to work in China at present. On the other hand, some expats who previously came to China for multiple short-term business trips may be looking to stay in China for a longer period, due to travel restrictions worldwide.
As you may know, expats’ China residence days is a key factor to calculating their PRC Individual Income Tax (IIT) liabilities and complete their IIT calculations and filings in compliance. From a tax perspective, it is important for the employer and expat employees to pay attention to the impact of the travel restriction policy on the IIT assessment.