Most of the Double Taxation Agreements ("DTA") concluded by China include an article on teachers and researchers, providing exemption of individual income tax ("IIT") for a certain period of time to qualified foreign teachers and researchers working in China (hereinafter referred to as "Teacher Article"). The State Administration of Taxation ("SAT") had issued certain circulars to provide implementation guidance for the Teacher Article, including the scope of eligible educational institutions, the determination of tax exemption period, and what documents are required for submission to enjoy the DTA treatment, etc.
The (SAT Public Notice  No. 91, hereinafter referred to as "PN91") recently issued by the SAT has significantly revised the Teacher Article's prescribed scope, expanding the DTA's eligible educational institutions from full time college and above higher education institutions accredited by the Ministry of Education ("MOE") to a much broader group that includes pre-schools, elementary and high schools, and schools for children of foreign nationals, etc.
The issuance of PN91 is undoubtedly good news to foreign teachers working in China from certain countries. With the Teacher Article being applicable to more foreign teachers, it will enhance the DTA's implementation certainty and thereby avoiding the possibility of double taxation plus providing the opportunity for appropriate tax arrangement. Educational institutions will also be more competitive than before in attracting foreign talents to China. While welcoming the good news, foreign teachers and educational institutions need to pay attention to the documents required for submission to enjoy the DTA treatment, especially Work Permit and other relevant documents required by PN91 plus how the DTA may be applied and managed.
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