ByteDance, the parent company of the Chinese video platform TikTok, has reportedly advised its Chinese national employees to pay income tax in China. This could affect employees looking to take advantage of the lower tax rates in Singapore, where the headquarters is located.
According to a Financial Times (FT) report on the 22nd local time, ByteDance instructed its Chinese national employees working at the Singapore headquarters to file income reports and pay taxes in their home country via an internal email. While this is a recommendation following China's revised income tax regulations for overseas residents from 2019, there is no legal enforcement.
Amid recent economic downturns, China has intensified tax collection and is thoroughly reviewing the tax records of high-income individuals and corporations. It appears that ByteDance has been affected by this change.
China's highest income tax rate is 45%, significantly higher than Singapore's (24%) or Hong Kong's (15%). As a result, employees working in Singapore could experience a difference in tax rates of up to 21 percentage points. To alleviate the burden on employees, ByteDance plans to provide subsidies for up to two years, although it is uncertain whether the subsidies will fully cover the tax difference.
Meanwhile, in addition to ByteDance, many Chinese corporations such as Alibaba, Tencent, and Shein are establishing a presence in tax-friendly Singapore, positioning it as a global hub.