Guangdong-Hong Kong-Macao Greater Bay Area Resumes Preferential IIT Subsidy for Foreign Talent in 2023

 Introduction:

In a move to attract high-end and in-demand talent from overseas, the individual income tax (IIT) subsidy policy for foreign talent working in China's Guangdong-Hong Kong-Macao Greater Bay Area (GBA) has been reinstated in 2023. Following the suspension of the subsidy in 2022 due to fiscal constraints related to COVID-19 prevention and control, the Guangdong provincial authorities have announced the revival of the policy. This article provides an overview of the GBA IIT subsidy and highlights the latest changes to the eligibility standards in the city of Guangzhou.

Background: The GBA IIT subsidy was initially introduced by China's Ministry of Finance (MOF) and State Tax Administration (STA) in 2019 as a means to attract foreign talent to the GBA region. Under this policy, eligible foreign professionals can receive a subsidy on the portion of their taxable income that exceeds 15 percent, with the local government covering the subsidized amount.

Suspension in 2022: Due to the financial strain caused by the COVID-19 pandemic and the allocation of resources towards prevention and control measures, municipal governments in the GBA suspended the IIT subsidy program in 2022. However, with the situation gradually improving, the Guangdong Provincial Department of Finance has issued a notice to the nine mainland GBA cities, signaling the resumption of the subsidy program.

Revised Eligibility Standards in Guangzhou: In line with the revival of the GBA IIT subsidy, Guangzhou has released a draft document outlining the updated requirements for foreign talent to qualify for the subsidy in the city. While the specific details may vary across GBA cities, it is essential to understand the general eligibility criteria. Foreign professionals seeking to benefit from the IIT subsidy must meet the following requirements:

1. Employment in Designated Fields:

• Foreign talent should be engaged in occupations that are considered high-end or in-demand in the GBA. These fields may include science and technology, finance, culture and arts, healthcare, education, and other sectors vital to the region's development.
• Legal Employment: Individuals must have valid employment contracts with enterprises or institutions registered in the GBA. Compliance with Chinese labor laws and regulations is crucial.
• Tax Payment: Foreign professionals must fulfill their tax obligations in China and have a legitimate IIT payment record in the GBA.
• Contribution to the GBA: Applicants should demonstrate their contributions to the economic development, innovation, and internationalization of the GBA region through their work and expertise.

Benefits and Subsidy Duration: Qualified foreign talent in the GBA will receive a subsidy on the portion of their taxable income that exceeds 15 percent. The exact percentage of the subsidy and the duration of the program may vary across GBA cities. It is advisable to refer to the specific guidelines and regulations issued by the respective municipal governments for detailed information.

Conclusion: The revival of the GBA IIT subsidy for foreign talent in 2023 signifies the commitment of the Guangdong provincial authorities to attract high-end professionals to the region. By providing financial incentives through tax subsidies, the GBA aims to foster talent retention and promote its economic growth and internationalization. Foreign professionals considering opportunities in the GBA should stay updated with the eligibility requirements and procedures established by the municipal governments to take full advantage of this preferential policy.