3️⃣Tax Incentive Policies for Foreign Resident Individuals

✊Income earned by resident individuals^(1) from within and outside China is subject to individual income tax.

>1. A resident individual refers to a person who has a domicile within China, or who does not have a domicile but has resided in China for a total of 183 days or more within a single tax year.

Foreigners qualifying as resident individuals have the option to enjoy one of the two preferential policies below (temporarily in effect until December 31, 2027):

➡️Housing allowances, language training fees, children's education fees, and other subsidies are exempt from paying individual income tax.

➡️Apply general policies of individual income tax special additional deduction in China (Expenditures for children's education, house renting, supporting parents, etc., are deductible from comprehensive taxable income)

4️⃣Tax Incentive Policies for Foreign Non-resident Individuals

💰Non-resident individuals^(2) are subject to individual income tax only on income derived from within China.

>2. A non-resident individual refers to a person who has no domicile in China and does not reside there, or a person who has no domicile and resides in China for less than 183 days in a single tax year.

💰An individual with no domicile in China who resides in China for a total of 183 days in a year for less than six consecutive years, upon filing with the competent tax authority, is exempt from paying individual income tax on his income derived from outside China and paid by foreign entities or individuals.

🏠Foreign individuals receiving dividends from FIEs are exempt from individual income tax.

Supplier background checks are a standard business practice in China. As a practicing lawyer, I regularly oversee large-scale supplier due diligence projects that require comprehensive risk assessment, verifying basic corporate information, litigation history, operational capacity, financial solvency, market credibility, and sometimes reviewing compliance issues.

For simple, low-risk procurement scenarios, full-scale due diligence is not always cost-effective. You can complete reliable preliminary background checks through accessible online resources^(1).

>1. ONLINE PLATFORMS
🎩official platforms, such as the National Enterprise Credit Information Publicity System and the Judgment Enforcement Information Disclosure Platform
💻mainstream commercial verification platforms, say, Qichacha, Tianyancha, Aiqicha, etc.
🚩All the information mentioned in the following Tips can be found on these platforms. However, the information isn’t always 100% accurate, so sometimes cross-checking is needed.

Step1️⃣ Verify Basic Corporate Information

Key verification items

Official company name, legal representative, shareholders and ultimate beneficial owners, registered address, registered capital, establishment date, core business scope, and any historical changes to the above information.

Practical tips

• A short operating history (less than 3 years) and frequent core business adjustments of a supplier typically signal operational instability. This does not necessarily mean the company is untrustworthy or unfit for cooperation, but it merits further targeted verification.
• It is common in China for a company’s shareholders, legal representative or actual controller to hold stakes in multiple enterprises. However, if most of their affiliated companies have been dissolved or had their business licenses revoked, you must exercise extreme caution. Such a track record may indicate the controller habitually deregisters old companies and establishes new ones to evade after-sales and contractual liabilities.
• If multiple seemingly unrelated enterprises are registered under the same address as your target supplier, the location is likely a centralized virtual registration address. This means the supplier may lack an actual on-site operation or physical office. For self-claimed manufacturers, their production may occur in small, unregulated family workshops. While this does not equate to inferior product quality, on-site or remote video verification is essential.
• Status of registered capital requires case-by-case evaluation. A disproportionately high registered capital with zero actual paid-in capital usually suggests the company is inflating its operational scale and financial strength. For this type of enterprises, we recommend cooperating with them cautiously, as their liquidity and solvency may collapse at any time.
• A social security contribution headcount of zero indicates the supplier has no formal full-time employees. It may operate entirely via outsourcing, or even function as a shell company with no independent production facilities.

Step2️⃣ Check Litigation and Enforcement Records

Key verification items

The company’s litigation and arbitration history, litigation records of its affiliated shareholders, legal representative and actual controller, and all court enforcement records targeting the company and its key affiliated individuals.

Practical tips

• Ordinary litigation or arbitration cases are commonplace for operating enterprises. Nevertheless, you should terminate all cooperation intentions immediately if the supplier or its core affiliated parties have active court enforcement records, particularly if they are listed as judgment debtors.
• Most publicly accessible court judgments are available online^(2). Suppliers with a high volume of contract dispute lawsuits are best avoided. For non-delivery-related cases, further detailed analysis is required. In particular, enterprises with frequent private lending disputes or labor disputes pose major risks, as their liquidity, delivery ability and solvency may collapse at any time because of the enforcement of a valid judgement.

>2. Full-text judgments from the past one to two years may not be fully available online, as Chinese courts implement standardized anonymization measures to protect personal and corporate privacy.

• Commercial platforms like Qichacha also document personal litigation records of corporate affiliates. A high number of individual lawsuits among affiliated shareholders, legal representative and actual controller is a strong red flag for cooperation. Most Chinese small and medium-sized enterprises lack strict corporate independence from their shareholders, meaning shareholders’ personal debt and legal disputes often easily undermine the company’s financial and operational stability.