An expatriate employee may be subject to tax laws and regulations of both home country and host country and so may face additional tax liability as a result of the assignment. Many companies implement tax equalization policy to protect their employees from the additional tax liability.

Understanding Tax Equalisation

Tax equalisation is a policy that employers often adopt to ensure that their expatriate employees are not financially advantaged or disadvantaged by differences in tax obligations, i.e. to ensure their after-tax income remains consistent regardless of where they are working. If the actual taxes of expatriate employees are higher than they would have incurred in home country, employers would reimburse the excess.

Tax equalization helps companies to enhance employees’ satisfaction by ensuring their tax neutrality and to help attract and retain top talents across the globe.

Our Individual Income Tax Equalisation Services

We offer comprehensive Individual Income Tax Equalisation Services to employers in Mainland China. Our services are tailored to the specific needs of our clients and include the following key areas:

Ø Tax Analysis and Planning: We conduct a thorough analysis of the expatriate employees’ tax situations in both home country and host country. Based on this analysis, we develop a tax equalisation plan that ensures tax neutrality.

Ø Tax Calculation and Reimbursement: We accurately perform hypothetical tax calculation and actual tax calculation and advise on the reimbursement.

Ø Tax Reporting and Compliance: We assist with tax reporting requirements in both home country and host country, ensuring compliance with all relevant tax regulations. We keep our clients updated on any changes in tax laws or regulations that may impact their tax equalisation policies.

Ø Employee Communication and Support: We help our clients to provide employees with clear explanations of their tax obligations and entitlements under the tax equalisation policies.