In the midst of China’s severe economic downturn and financial crisis, the Chinese tax authorities have started targeting income of overseas Chinese employees in an attempt to make up for financial shortfalls. This development signals that the interest rate differential in the era of globalization no longer exists, and overseas Chinese employees now face choices.
As China’s tax filing season approaches, ByteDance has reminded its overseas Chinese employees to report their income to the mainland tax authorities.
Recently, a post circulating on social media featured a former ByteDance employee who joined TikTok in the United States in 2025 using the F-1 OPT visa directly, then left the company. He had never held an L-1 visa and had never been deployed to the US by the company.
However, on February 3, he received a “2025 China Mainland Individual Income Tax Filing Reminder” from ByteDance. The content of the reminder stated that Chinese citizens who earn income outside of mainland China need to report and pay taxes in China.
The company expressed its support and encouragement for completing the tax filing for the 2025 tax year in China and has hired tax service providers to assist employees in fulfilling this obligation at the company’s expense. If employees need assistance, they were instructed to inform the company by email before February 13, 2026.
The deadline for filing the 2025 China Mainland individual income tax is June 30, 2026. The company warned that if employees fail to register by February 13, service providers may not guarantee assistance with tax filing by June 30, and late filing may incur penalties.
Last year, ByteDance had already sent out tax information to its overseas (US, Singapore, Japan, and other countries) Chinese employees, making this the second round of notifications.
The Financial Times reported in January 2025 that ByteDance, the parent company of TikTok, required its Chinese employees based in Singapore to pay taxes in China, or else they might not be able to cash in their stock options.
According to Bloomberg, in early June last year, some Chinese employees working in TikTok’s US offices received similar notifications. Despite paying federal and state taxes in the US, they were required to pay additional taxes in China as well, with tax rates reaching up to 45%.
Insiders further disclosed that TikTok is communicating with employees on this matter and arranging multiple meetings and consultations with tax advisers to address related concerns.
According to the United Morning Post, some major corporations like Tencent are also requiring their Chinese employees to pay taxes in China. If the amount of tax paid overseas is lower than what is due in China, individuals are required to make up the difference; if it is higher, no refund will be issued.
However, Chinese employees of some American companies appear to be exceptions. According to the South China Morning Post, two employees of US tech giants Google and Meta Platforms revealed that Chinese citizens working at these companies had not received similar notifications.
Since January 1, 2019, China has implemented the “Individual Income Tax Law,” which stipulates that resident individuals must pay personal income tax on income earned both domestically and overseas. The law defines a resident individual as someone who spends a cumulative total of 183 days or more within China during a tax year.
The law outlines nine categories of income that are subject to personal income tax, including wages, service compensation, royalties, franchise fees, business income, interest, dividends, property lease income, property transfer income, and incidental income.
Since the 1980s, the Chinese Communist Party has been practicing global taxation policies, but enforcement has been strengthened in recent years.
One significant background factor is the OECD’s release of the “AEOI Standard” in 2014, which broke down barriers for countries to obtain information on offshore accounts of tax residents, enhancing global tax transparency.
Subsequently, China began implementing the Common Reporting Standard (CRS) in 2017. Under CRS rules, information on accounts held by Chinese tax residents or individuals who control non-financial entities abroad is exchanged with Chinese tax authorities.
In 2018, China conducted its first information exchange, followed by the implementation of the new “Individual Income Tax Law” in 2019, which included additional anti-tax evasion provisions.
Davy Jun Huang, an economic scholar in the United States, commented to Dajiyuan that this action is a result of reactivating legal tools, coupled with fiscal pressures, and mature technological conditions, rather than a single cause. The year 2018 was a turning point as China officially joined the CRS, allowing for systematic retrieval of outstanding payments.
He added that prior to 2018, strict enforcement was not prioritized due to less severe capital outflow and relatively low overseas individual income. However, as fiscal constraints have tightened in recent years, enforcement efforts have intensified.
“It could be said that the capabilities and necessity that once were lacking now exist,” he remarked.
Since June 2024, reports from overseas media have surfaced concerning high net worth individuals in China receiving messages from tax authorities prompting them to verify their overseas income and make tax declarations as required by law. As a result, there has been an increase in related reports.
Starting in March 2025, tax authorities in Shanghai, Shandong, Hubei, Zhejiang, and other provinces have begun to investigate individuals who have not reported their overseas income, signaling a shift from information collection to enhanced enforcement in tax oversight.
On November 11 last year, tax departments in Beijing, Guangdong, Shenzhen, Fujian, Xiamen, and Sichuan simultaneously publicized six cases of unreported overseas income, with the highest case requiring a total payment of 6.659 million yuan in taxes and late fees.
Bloomberg reported last June, citing sources, that the Chinese Ministry of Finance believes that levying income tax on individuals who have not reported or been identified by tax authorities can increase government revenues.
Official data from the Chinese government shows that personal income tax revenue increased by 11.5% last year, reaching 1.62 trillion yuan.
Shao Ping Wu, a Chinese lawyer in the United States, explained to Dajiyuan that with various economic data becoming increasingly unfavorable in China, most regions are facing financial difficulties. The serious enforcement now is primarily due to insufficient fiscal revenues in the Chinese Communist Party, necessitating the compensation through overseas income.
Wu pointed out that beyond overseas income and securities, activities such as opening online stores by domestic e-commerce companies that were previously not subject to tax supervision are now required to pay taxes in the past two years. Even activities such as video streaming are now included in the tax base as authorities strive to expand tax collection to offset revenue shortfalls.
In the era of globalization, the difference in institutional policies between the US and China has attracted many individuals to navigate on the edge of both countries, forcing overseas Chinese employees to make choices.
The former TikTok employee mentioned earlier continued his post by highlighting extreme tax implications, where a group earning $200,000 annually corresponds to 1.4 million yuan, subject to federal taxes of 22-24%, in addition to the difference owed in Chinese personal income taxes of 21-23%, resulting in a net salary reduced to 60%.
The employee further noted that several internet users had corroborated receiving the notification, emphasizing that Chinese nationals face risks as companies like ByteDance collect passport information during I-9 verification, H-1B/PERM processing, and even trips to China, making it difficult to conceal nationality information.
Huang stated that the closure of the individual tax loop due to China joining CRS has been achieved, in addition to the increasing regulatory compliance by corporations, KYC by banks, employer I-9 verifications, stock records, and other compliance measures. Multinational corporations have now become tax nodes, signaling the end of a era where overseas high salaries could evade taxation via loopholes.
“In simple terms, the approach of seeking high salaries overseas to avoid taxes is no longer viable,” he concluded.
Huang pointed out that Chinese taxes are higher than US federal taxes, impacting high-earning technical personnel significantly. Overseas Chinese employees now face three paths: full compliance by reporting global income, adopting a gray area approach, or potentially restructuring their identities by acquiring citizenship of other countries.
He stressed that changing citizenship is not merely an emotional decision but a practical response to the friction between systems’ costs. In an era of increasing global tax transparency, maintaining consistency between identity and assets long-term is essential. If the long-term professional and financial presence is overseas, individuals may find the cost of taxation higher than changing their status, leading them to seek alternative solutions.