The Chinese Government has linked the largest urban cities to develop the world’s biggest urban area, The Greater Bay Area (GBA). The cooperation between the 11 member cities aims to develop further and improve multiple sectors, including technology and innovation, infrastructures, and transportation networks, ultimately building job opportunities. However, alongside comes many challenges. One is attracting talent. Hence, the question arises, how does the government aim to attract this talent who will be the driving force of this ecosystem?
In March 2019, The Ministry of Finance and the State Administration of Taxation announced the “Preferential Individual Income Tax Policies in GBA” that will be implemented between 1 January 2019 and 31 December 2023 in the 9 cities.
The incentive would allow workers to balance their tax expenses and parallelly allow employers to benefit by reducing the employment cost via tax rebate. The government brought this tool for Individual Income Tax to leverage foreign profiles from Mainland China and Hong Kong, Macao, and Taiwan, motivating them to consider GBA as an option and retain them.
The subsidies are calculated based on the following items:
– Comprehensive income (wages, salaries, labor compensation, remuneration of independent services, royalty income) and an excess progressive tax rate of 3% to 45% is applicable.
| Less than 36,000 yuan | 3% |
| 36,000 – 144,000 | 10% |
| 144,000 – 300,000 | 20% |
| 300,000 – 420,000 | 25% |
| 420,000 – 660,000 | 30% |
| 660,000 – 960,000 | 35% |
| Above 960,000 | 45% |
– Operating income, an excess progressive tax rate of 5% to 35% is applicable
| Less than 30,000 | 5% |
| 30,000 – 90,000 | 10% |
| 90,000 – 300,000 | 20% |
| 300,000 – 500,000 | 30% |
| Above 500,000 | 35% |
– Other income – 20% proportional tax rate is applicable (interest, dividends, bonuses, property lease, property transfer, and incidental income)
– The subsidy is calculated by the following method: Individual Income Tax – Taxable Income in sub-items x 15%.
Though the policy aims to promote the whole GBA, local rules differ when assessing the profiles of the talents applying for the subsidy. Each city has different requirements qualifying workers as “Talent in short supply” or “High-end talent”. Therefore, workers need to meet conditions based on each local area in the 9 cities.
Ralph Waldo Emerson said, “Of all debts, men are least willing to pay their taxes”. With now tax incentive in place, motivating workers to consider GBA and attracting talent would be smoother. However, being qualified for the subsidy or dealing with several government institutes in applying for the tax incentive may be difficult. Therefore, it’s highly recommended to consult with a professional tax advisor.
For more information, feel free to contact Ms. Phenix Zheng: phenix.zheng@cwhkcpa.com.
