April 9, 2020

COVID-19 – A Case for Action #2 – China Tax Savings

This is part of a special Global Mobility Tax client alert series – sharing stories and situations we are encountering in these extraordinary times.

The COVID-19 global pandemic calls for quick action based on government directives in the interest of public health and safety. In this environment, arriving at practical mobility solutions can be challenging. Here’s how Global Mobility Tax has supported mobility programs in recent weeks :

Action #2: China Tax Savings

Tax Equalized Assignees abruptly returned to the US during the China lockdown to later return to when health conditions warrant. 

US payroll – the employees are incurring a US tax liability while working in the US

ACTION: Reinstate US withholding instead of hypothetical tax

IMPACT: The employee will not suffer any difference in net-pay

SAVINGS: Estimated tax penalties and payroll reporting penalties of up to 20% are avoided.

Chinese payroll – the employees are not subject to Chinese tax while working in the US

ACTION: Adjust the Chinese payroll reporting to show they were not in China during this time

IMPACT: The employee will not suffer temporary double taxation or large balances due back to the company

SAVINGS: Claiming refunds of Chinese taxes is a lengthy and uncertain process; the correct payment of taxes saved this company $20,000 in taxes and $5,000 in administrative fees and labor.

How can we help you? 

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For 15 years, Global Mobility Tax, has been assisting startups and early growth companies to navigate the tax implications of a global workforce. We provide strategy, consulting, and tax services to organizations and individuals that relocate internationally.

Contact us for any of your global mobility questions or concerns.

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