Chatting with a bunch of people - this tax was always in effect but never enforced.
One of those things that people should have been aware of and were enjoying the lack of enforcement.
Hard to feel sorry for these guys - but this quote (nikkei above) is not correct I think?
US is one of the only developed economies that taxes its own citizens when they are living abroad - though they do get a US$100k foreign earned income exception. EU countries do not do this - so which others - Oz and Japan?Tax experts are not surprised at the practice, as it has been adopted by many developed economies including the U.S.
@shri - yep, always in effect just never enforced. not uncommon in China. Its the same wrt Social security for 'foreigners' in Shanghai. It's the law but no one enforces it. Some risk averse companies have accrued for this potential exposure over the years but many/most have not so once it's enforced it will be a shock.
the big issue in China is that whilst they have started enforcing worldwide taxation, they have not developed (yet) a systematic and reliable way of giving foreign tax credits in practice. In theory it exists but depending on where you are registered in china for tax, the local tax officials may not get the FTC claim and disallow it or challenge it. This can result in actual double tax and with the social rating system in place now some people are worried about being seen as 'tax dodgers' on their records. I think the china system will get there but it's a big country and these things take time, as with all change management.