Recently, the Ministry of Finance and the State Administration of Taxation of the PRC jointly issued a circular (Caishui [2022] No.29), which announces that the following individual income tax preferential policy will be implemented from 1 January 2022 to 31 December 2026:

1. For Hong Kong and Macao residents working in Nansha, Guangzhou, the part of the individual income tax (IIT) burden exceeding the tax burden of Hong Kong and Macao shall be exempted.
   
   
2. The income that is eligible for the individual income tax preferential policy includes comprehensive income derived from Nansha, Guangzhou (including wages and salaries, labor remuneration, author’s remuneration, and royalties), business income, and subsidized income for talents recognized by the local government.
   
   
3. Taxpayers can enjoy the above preferential policy when handling the annual individual income tax settlement in Nansha, Guangzhou.

The above individual income tax preferential policy is different to the existing preferential individual income tax policies in Guangdong-Hong Kong-Macao Greater Bay Area (GBA).

According to the existing preferential individual income tax policies in the GBA, only eligible overseas high-end talents and overseas ungently needed talents that work in nine mainland cities of the GBA can apply for and receive financial subsidies when their individual income tax paid in the GBA exceeds 15% of their taxable income.

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