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China’s expat tax breaks extension praised by Western companies, but business concerns remain

  • European Chamber of Commerce in China says decision will ‘stem the flow of foreign talent’
  • Protectionism, an opaque regulatory system and travel restrictions still frustrate multinationals

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China’s extension of non-taxable allowances has been praised by foreign business groups. Photo: Getty Images
Frank Tang
China’s last-minute decision to extend tax exemptions on expatriate employee allowances for two more years has been welcomed by foreign business groups, though worries about rising costs, coronavirus-related travel restrictions and market access remain.
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Joerg Wuttke, president of the European Chamber of Commerce in China, said the extension of non-taxable allowances, announced by the Ministry of Finance and the State Taxation Administration on Friday, is highly significant for foreign firms and benefits China as well.

“We believe this solution provided by the Chinese authorities will stem the flow of foreign talent from China, which will help to maintain a high level of competition and innovation within the Chinese market, while also improving international relations in general,” he said in an online statement released on Sunday.

The European chamber, which has 1,700 member companies, has lobbied hard for retention of the tax breaks, including in a letter to China’s top leadership last year.

The American Chamber of Commerce in China (AmCham China) also welcomed the decision, which helps companies “better retain and attract certain critical expatriate employees, while managing operational costs”.

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