Tax system in China
China taxes individuals who are domiciled in China, or present for 183 days or more in the year, on worldwide income. Others pay only on China-source income.
Wages and labour income are pooled each year and taxed at seven progressive rates from 3% to 45%, after a CNY 60,000 basic deduction and family deductions for children, housing, education and elderly parents. Most other personal income, including dividends and property sales, pays a flat 20%.
Companies normally pay 25% enterprise income tax, with 15% for certified high-tech firms and a 5% effective rate for small low-profit businesses. VAT of 13%, 9% or 6% applies to sales and services under the new VAT Law in force since January 2026.
Tax rates at a glance
- Income tax
- 3% - 45%Progressive
- Wealth tax
- 0%
- Inheritance tax
- 0%
- Capital gains tax
- 20%
- Corporate tax
- 25%
- Dividend tax
- 20%
- VAT
- 13% / 9% / 6%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
EmployeesExpatsInvestorsFoundersCross-border groups
Watch out for
- China is not a low-tax jurisdiction at the top. The 45% top individual rate plus social insurance makes high salaries expensive, even though the entry rate is only 3%.
- Expat allowances versus family deductions is a yearly choice. Foreign residents pick one system per calendar year and cannot switch mid-year, so the decision needs modelling before January.
- The six-year rule decides when a foreigner without Chinese domicile becomes taxable on worldwide income. Trips abroad of over 30 days reset the clock, which makes travel records tax-relevant.
- Consumption and property-related taxes add up. VAT, consumption tax on luxuries and fuel, deed tax and stamp duty can matter as much as income tax for some households and deals.
Frequently asked questions
Is China a high-tax country?
At the top it is. The 45% top individual rate and 25% corporate rate sit near developed-economy levels, while low and middle salaries face modest 3% to 20% bands plus deductions.
Does China have a wealth tax?
No. China levies no net wealth tax on individuals.
Which taxes matter most in China?
The main ones are individual income tax, enterprise income tax, 20% tax on dividends and property gains, VAT of 13%, 9% or 6%, and social insurance contributions.