Overview of the preferential Individual Income Tax IIT policies in the GBA
In order to support the development of the GBA and attract overseas (including Hong Kong, Macao and Taiwan) high-end talents and critically lacking talents to work in the GBA, the Ministry of Finance and the State Taxation Administration jointly issued the Notice on Preferential Individual Income Tax Policies in Guangdong-Hong Kong-Macao Greater Bay Area (Cai Shui [2019] No. 31), confirming that overseas high-end talents and critically lacking talents working in the nine Pearl River Delta cities of Guangdong Province within the GBA (“the nine Pearl River Delta cities” ) will be given financial subsidies according to the difference between the amount of IIT levied by the Mainland and by Hong Kong, and such subsidies are exempt from IIT .
On 17 June 2019, the Department of Finance of Guangdong Province and the Guangdong Provincial Tax Service, State Taxation Administration issued the Notice on Implementation of Preferential Individual Income Tax Policies in Guangdong-Hong Kong-Macao Greater Bay Area (Yue Cai Shui [2019] No. 2) which is valid till the end of 2019. On 31 December 2020, the Department of Science and Technology of Guangdong Province, the Human Resources and Social Security Department of Guangdong Province, the Guangdong Provincial Tax Service, State Taxation Administration jointly released the Notice on Continuous Implementation of Preferential Individual Income Tax Policies in Guangdong-Hong Kong-Macao Greater Bay Area (Yue Cai Shui [2020] No. 29), which restates the detailed measures concerning the income types included in the preferential IIT policies, the specific standards for financial subsidies, the requirements for eligible overseas high-end talents and critically lacking talents, the relevant talent identification or management departments, etc. Yue Cai Shui [2020] No. 29 shall be implemented from 1 January 2020 till 31 December 2023. Please see below for more details:
1. The income types included in the preferential IIT policies: to encourage overseas talents to work and start up business in the GBA, the applicable types of individual income mainly involve income from work or labor, including: 1) wages and salaries; 2) income from provision of independent personal services; 3) income from author’s remuneration; 4) income from royalties; 5) income from business operations; and 6) income from subsidies obtained by being enlisted in approved talents projects.
2. The standards of IIT subsidy: Overseas high-end talents and overseas critically lacking talents who work within the GBA can apply for financial subsidies if their IIT paid in the nine Pearl River Delta cities exceeds the tax amount computed at 15% of their taxable income. Subsidies shall be granted in a lump sum based on categorized IIT computation (comprehensive incomes shall be computed with comprehensive method) and subsidies are processed once a year. If the talents have income sourced from two or more GBA cities, the financial subsidies shall be prorated in accordance with the relevant sources of income.
3. The requirements for eligible overseas high-end talents and critically lacking talents: Yue Cai Shui [2020] No. 29 specifies the basic and essential requirements for talents eligible for financial subsidies. Applicants shall meet both the basic and the essential requirements to enjoy the financial subsidies.
· Basic requirements: The applicant shall 1) be a permanent resident of Hong Kong or Macao, a Hong Kong resident under the Hong Kong’s Admission Schemes for Talents, Professionals and Entrepreneurs, a Taiwanese resident, a foreigner, a returned overseas Chinese or a returned overseas Chinese student who has obtained the right of long-term residence abroad; and 2) work in the GBA and pay IIT in the GBA according to law; and 3) comply with laws and regulations, ethics and integrity of scientific research.
· Essential requirements: Meanwhile, the applicant shall also meet one of the following essential requirements:1) Talents enlisted in major national, provincial or municipal talent programs, holders of Superior Talent Card, holders of Work Permit for Foreigners Working in China (Class A) or Confirmation Letter of High-end Foreign Talents, other overseas high-level talents accredited by state, province or cities; or 2) scientific research team members of major innovation platforms at the national, provincial or municipal level, members of scientific research and technical teams in universities, scientific research institutions, hospitals and other related institutions, technical cadres who work or engage in business in key industries and fields of the Guangdong Province, and other critically-lacking talents with special skills who are recognized by the nine Pearl River Delta cities.
4. Talent identification departments: According to the talent categories, the science and technology department (foreign experts’ affairs) in the nine Pearl River Delta cities will be responsible for the determination of the qualification of overseas high-end talents, while the human resources and social security department in the nine Pearl River Delta cities will be responsible for the determination of the qualification of critically-lacking talents respectively.
