On 17 June 2023, the Finance Department, Science and Technology Department, Human Resources and Social Security Department of Guangdong Province and Guangdong Taxation Bureau of State Taxation Administration jointly released the Circular on Further Implementing the Preferential Policies for Individual Income Tax in Guangdong-Hong Kong-Macao Greater Bay Area (Yuecaishui [2023] No. 21, hereinafter referred to as the Circular) on the official website of the Finance Department of Guangdong Province, which has updated the preferential individual income tax (IIT) policy for overseas talents in Guangdong-Hong Kong-Macao Greater Bay Area (GBA).

The major change of such update is to explicitly set a cap on IIT subsidy for overseas talents. Prior to the issuance of the Circular, only Shenzhen has clearly stipulated that the maximum amount of IIT subsidy for each overseas talent per tax year is RMB5 million.

According to the Circular, overseas high-end and urgently needed talents working in the GBA shall be eligible for a financial subsidy from the respective municipal government to cover the proportion of their IIT paid in the nine mainland cities of the GBA (i.e., Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen, Zhaoqing) that exceeds 15% of their taxable income. Such financial subsidy is exempted from IIT. And the IIT subsidy is capped at RMB5 million for each taxpayer per tax year.

The applicant of the IIT subsidy shall meet the following basic conditions:

1. Being a permanent resident of Hong Kong and Macau, a Hong Kong resident who has obtained residency through a Hong Kong admission scheme (for talent, professionals and entrepreneurs), a resident of the Taiwan region, a foreign national, a returned overseas student or overseas Chinese who has obtained long-term residence abroad;
2. Working in one of the nine mainland cities and pay taxes there according to law;
3. Abiding by laws and regulations, scientific research ethics, and scientific research integrity;
4. Being a talent in the fields of scientific and technological innovation, key development industries, and philosophy and social sciences, and meet the requirements of the catalogs of overseas high-end and urgently needed talents in each city.

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