For many years, China was the boom country for Western companies. But many foreigners are leaving the People’s Republic and companies are reluctant to invest. Beijing is trying to counteract this with further tax breaks.
China is granting tax breaks to foreigners until the end of 2027, instead of phasing them out at the end of this year as originally planned. Beijing wants to stop the exodus of foreign experts who have been leaving the country in large numbers for years. Reduced income tax is now to apply for four more years, and rent, language lessons and school fees for the children of foreigners will also remain tax-free.
“Economy needs signs like this”
“This is good news for local companies, because otherwise the tax burden would have quickly added up to five or six figures,” says Jens Hildebrandt, Managing Director of the German Chamber of Commerce in Beijing. In addition, the Chinese government is implementing some of its announcements of helping foreign companies do business. “This is an important thing, because the economy needs signs like this at the moment due to the weakening economy.”
The European Chamber of Commerce in Beijing also described the extended tax breaks as very good news. This could help more foreigners decide to take jobs in China with their families. According to the German Chamber of Commerce in China, only 70 percent of companies employ foreigners. The EU Chamber of Commerce even estimates that up to 50 percent of all Europeans have left China as a result of Covid.