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New policy announced to reduce tax bearing of Hong Kong residents working in Hetao, Shenzhen

Recently, the Finance Bureau of Shenzhen Municipality hasannounced a new preferential taxpolicy that targets Hong Kong residents working in the Shenzhen Park of theHetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone. This policy exempts them from the portion of personal income tax that exceeds the tax to be levied according to the tax system in Hong Kong.

While the policy was implemented from April 10, 2024, with a validity period of one year, it has retrospective effect dating back to January 1, 2023.

The tax preferential policy applies to personal income that Hong Kong residents obtain in the Shenzhen Park of theHetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone. It covers several categories, including income from wages and salaries, income from labor service payment, income from authors' remuneration, income from royalties, income from production and operation derived by industrial and commercial households, income from contractual or leasing operations to enterprises or institutions, and income fromtalent subsidies recognized by the local government. During the annual personal income tax filing in the mainland, usually between March 1 and June 30 each year, Hong Kong residents can apply for a tax return for the part exceeding the amount of tax that they need to pay if using the calculation of Hong Kong's tax system.

Hong Kong residents who enjoy this preferential policy must be employed by and actually work for enterprises and institutions registered in the Shenzhen Park, or provide personal services, or engage in production and operations management in the Shenzhen Park during the tax year. In addition, the applicants should have paid the personal income tax in accordance with the law and have no record of severe tax crimes or tax fraud.

To provide the applicants with more convenience, the tax and financial departments in Shenzhen will release application guidelines and simplify the procedures in the immediate future. The introduction of this policy will bring the mainland and Hong Kong in convergence of tax payment, in the hope that more Hong Kong residents will come to and work in the Shenzhen Park of Hetao Cooperation Zone.

Reporter | Chen Siyuan

Editor | Nan, Abby, James

Source | Finance Bureau of Shenzhen Municipality 

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