Working remotely for a foreign company from home: this income is considered domestic earnings for tax purposes; you must file your own individual income tax returns, and incoming payments should be reported as “employee compensation”

Whether this money counts as domestic or foreign depends on where you do the work, not on where the money is sent from. If you are in China and work remotely for a company outside China, it counts as domestic income, and you pay individual income tax in China. If that company has no establishment in China, nobody withholds the tax for you, and you have to file it yourself. Money coming in goes through the route called employee remuneration (职工报酬).

Cost

There are no direct expenses. You must file an annual tax reconciliation between March 1 and June 30 of the following year. If your annual inflow exceeds the permitted limit, you’ll also need to provide an employment contract and proof of earnings. The main difficulty lies in remembering to file this tax yourself.

Benefit

Whether this income qualifies as domestic earnings is determined by Article 3 of the Implementing Regulations of the Individual Income Tax Law (Decree No. 707 issued by the State Council, effective January 1, 2019). It states: “Unless otherwise stipulated by financial or tax authorities under the State Council, the following types of earnings are regarded as originating in China, regardless of where payment is made: (1) earnings derived from providing services within China through employment, engagement, or contractual obligations.” Article 6 of the same regulations defines two relevant tax categories. Wages and salaries are defined as “any compensation, bonuses, year-end incentives, labor dividends, allowances, subsidies, and other earnings related to employment or engagement.” Meanwhile, “labor remuneration” refers to “any income earned through personal services such as design, decoration, installation, drafting, testing, medical work, legal services, accounting, consulting, teaching, translation, editing, calligraphy, sculpture, film production, recording, performance, advertising, exhibitions, technical assistance, brokerage, agency work, and similar activities.” According to Article 6 of the Individual Income Tax Law, the taxable base for residents is calculated by subtracting 60,000 RMB, mandatory deductions, additional allowances, and other legally permitted deductions from total annual earnings. However, for labor remuneration specifically, a 20% expense is deducted and only 80% of the gross amount is the income amount — wages and salaries are taxed at 100% of their full value. Article 9 clarifies that taxpayers are responsible for paying income tax, while employers or payers serve as withholding agents. Article 10 specifies that taxpayers must file returns under several circumstances, including when no withholding agent exists or when foreign earnings are received. Annual reconciliation must be completed between March 1 and June 30 of the following year. Regarding currency inflows, Article 9 of the Administrative Measures on Personal Foreign Exchange (issued by the People’s Bank of China, Decree No. 3 of 2006, effective February 1, 2007) establishes an annual cap of USD 50,000 per individual for non-commercial foreign exchange transactions. Within this limit, individuals may exchange currency using only valid identification; exceeding it requires additional documentation such as employment contracts and proof of income. Article 7 further prohibits banks and individuals from circumventing these limits through split transactions or falsified documents. The detailed implementation rules (Document No. 1 issued in 2007) reiterate this annual cap and specify that employee compensation must be supported by a valid contract and income verification.

Notes

Which tax category applies depends on your relationship with the foreign employer. If you’ve signed an employment contract and follow their instructions, your earnings are classified as wages and salaries. If you’re contracted independently and deliver results on a project basis, they’re treated as labor remuneration. These two categories are taxed differently, so it’s essential to determine which applies before filing. For incoming payments under USD 50,000 per year, you can exchange currency simply by presenting your ID. Any amount exceeding this threshold requires submission of your employment contract and income proof to the bank. Avoid attempting to split payments artificially to bypass these limits. This guidance applies strictly to individuals working from within China without physically relocating abroad. Those who actually move overseas to work for foreign firms must follow different regulations, as outlined in Section 14 of this chapter (check first whether the employer holds proper licensing for overseas labor deployment). Four related topics are not addressed in this book due to lack of verifiable evidence: whether VAT applies or if invoices must be issued; whether long-term remote workers should obtain a business license or register as self-employed; whether labor laws permit claims for vacation time, overtime pay, or severance from foreign employers; and issues concerning cross-border data transfer and confidentiality. A total of 2006 RMB is the maximum annual limit for personal foreign exchange transactions under these rules.

Sources · 5

1. 国务院 (2018). 中华人民共和国个人所得税法实施条例（国务院令第 707 号，第三、六条）. gov.cn/zhengce/zhengceku/2018-12/22/content_5…
2. 全国人民代表大会常务委员会 (2018). 中华人民共和国个人所得税法（2018 年第七次修正，第六、九、十、十一条）. npc.gov.cn/zgrdw/npc/xinwen/2018-09/05/conten…
3. 国家税务总局政策法规库. 中华人民共和国个人所得税法（第六条）. fgk.chinatax.gov.cn/zcfgk/c100009/c5193028/co…
4. 中国人民银行 (2006). 个人外汇管理办法（中国人民银行令〔2006〕第 3 号，第七、九条）. gov.cn/gongbao/content/2007/content_786257.htm
5. 国家外汇管理局 (2007). 个人外汇管理办法实施细则（汇发〔2007〕1 号，第二、十条）. safe.gov.cn/safe/2007/0105/22509.html