Implementation Measures for Individual Income Tax Incentives in the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone
Chapter One: General Principles
Article 1 In order to implement the requirements of the “Overall Planning for the Development of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone” and according to the relevant provisions of the notification by the Ministry of Finance and the State Administration of Taxation regarding individual income tax incentives in the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (National Finance and Taxation Regulations [2024] No. 12), these measures are formulated.
Article 2 These measures apply to Hong Kong residents enjoying individual income tax incentives within the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (hereinafter referred to as the “Qianhai Cooperation Zone”) as delineated in the Qianhai Plan.
Article 3 For Hong Kong residents working in the Qianhai Cooperation Zone, the portion of their personal income tax burden that exceeds their tax burden in Hong Kong will be exempted.
Article 4 The calculation of the personal income tax reduction or exemption amount shall be based on a tax year, which runs from January 1 to December 31 of the Gregorian calendar year.
Article 5 If a Hong Kong resident satisfies the conditions for both the personal income tax incentives specified in these measures and the incentives for overseas high-end talent and urgently needed personnel in the Guangdong-Hong Kong-Macao Greater Bay Area during the same tax year, they may choose to enjoy one of the incentives but cannot enjoy both simultaneously.
Chapter Two: Conditions and Scope of Exemption
Article 6 Hong Kong residents eligible for the incentives outlined in these measures must simultaneously meet the following conditions:
1. The taxpayer possesses Hong Kong resident status;
2. During the tax year, they must hold a position, be employed, and effectively work at a substantial operating enterprise or other institution registered in the Qianhai Cooperation Zone, or provide independent personal services in the Qianhai Cooperation Zone, or engage in production and business activities in the Qianhai Cooperation Zone, paying personal income tax in accordance with the law;
3. They must comply with local laws and regulations and must not have had any major tax law violations or acts of dishonesty in the three years preceding the enjoyment of these incentive policies.
Article 7 If a taxpayer qualifies for the conditions laid out in Article 6 due to obtaining Hong Kong resident status within the tax year, they may begin enjoying the incentives the month following the acquisition of that status. Conversely, if they lose their Hong Kong resident status within the tax year and thus no longer qualify as stipulated in Article 6, they will stop enjoying the incentives starting the month following the loss of that status.
Article 8 The individual income that enjoys preferential treatment specifically includes:
1. Comprehensive income from the Qianhai Cooperation Zone, including:
a. Wages and salaries: This refers to income received by individuals due to their employment or positions in the Qianhai Cooperation Zone, including salaries, bonuses, year-end raises, labor dividends, allowances, subsidies, and any other income related to their employment;
b. Income from labor services: This pertains to income earned by individuals for services rendered in the Qianhai Cooperation Zone;
c. Income from contribution fees: This refers to income obtained by individuals due to the publication of their works in the form of books, newspapers, etc., from the Qianhai Cooperation Zone;
d. Income from royalties: This involves income earned by individuals for providing rights to patents, trademarks, copyrights, non-patented technologies, and other licensed rights from the Qianhai Cooperation Zone, excluding contribution fees related to copyrights.
2. Business income sourced from the Qianhai Cooperation Zone: This specifically refers to income derived from production and business activities conducted within the Qianhai Cooperation Zone.
3. Talent subsidy income: This includes income derived from talent subsidies obtained through talent programs or projects recognized by the Qianhai Authority, Nanshan District, Bao’an District, or other government entities and departments at or above the district level.
The income stipulated in this article excludes income subject to tax inspection and supplementation, as well as income assessed by tax authorities for increases.
Article 9 The calculation of the tax reduction and exemption amounts will be based on the individual income items specified in Article 8 of these Measures, calculated by category (comprehensive income will be computed collectively) and combined for reduction and exemption.
Hong Kong residents who obtain individual income as defined in Article 8 and are subject to annual tax reconciliation according to tax laws should determine their income tax liability based on the total taxable amount set during the annual reconciliation.
Chapter Three: Tax Collection Management
Article 10 Hong Kong residents enjoying preferential treatment as stipulated in these Measures can apply for tax refunds during the annual reconciliation of individual income tax.
Article 11 Hong Kong residents may choose one of the following methods to handle tax reduction and exemption:
1. Handle it themselves;
2. Have their employer (including any unit that withholds personal income tax on labor service income according to cumulative withholding) handle it on their behalf;
3. Entrust a professional tax service agency or other units and individuals to handle it, and both the taxpayer and the trustee must sign an authorization letter.
Article 12 Hong Kong residents applying for tax reduction and exemption procedures must report to the local tax authority in the Qianhai Cooperation Zone.
Article 13 The Qianhai Tax Service and the Bao’an District Tax Service of State Taxation Administration should promptly publish reporting guidelines, clarify the reporting subjects, methods, timeline, necessary documents, reporting procedures, and other relevant information, to facilitate Hong Kong residents in their applications.
Article 14 Hong Kong residents may enjoy tax treatment based on the arrangements to avoid double taxation signed between the Chinese mainland and Hong Kong, as well as relevant regulations of the Ministry of Finance and the State Taxation Administration, but they can also opt not to enjoy these tax benefits in their calculations.
Article 15 Any acts of false tax declaration, failure to pay, or underpayment of tax liabilities once verified will be dealt with according to the Law of the People’s Republic of China on Tax Collection Management and other related laws and regulations. If such acts constitute a crime, criminal liability will be pursued according to the law.
Chapter Four: Supplementary Provisions
Article 16 These Measures shall be effective from May 27, 2024, and shall remain valid for one year. Individual income tax for Hong Kong residents working in the Qianhai Cooperation Zone from January 1, 2023, until the implementation of these Measures, shall be executed in accordance with these Measures.
This Measures shall apply if the tax year for which a Hong Kong resident applies to enjoy the preferential treatment of personal income under this Measures is within the effective period of this Measures.