AdSense Income Tax Guide: Complete Guide to Personal Income Tax Filing (Including W-8BEN Form and Tax-Saving Tips)

Last month, when I logged into my AdSense dashboard, I discovered that my income had suddenly dropped by nearly a quarter. I was completely confused—click-through rates hadn’t decreased, traffic was normal, so where did the money go?

After investigating, I found out it was withheld by Singapore tax authorities at 24%. It turns out Google updated its policy last October, and if you don’t fill out tax information, they withhold that much by default. What worried me even more was that a quick online search revealed countless stories about “undeclared foreign income being investigated” and “back taxes plus fines reaching hundreds of thousands.”

To be honest, I always thought AdSense income was “foreign exchange income” and didn’t need to be managed within the annual $50,000 USD quota. It wasn’t until I received a reminder from the tax bureau that I realized I was completely wrong: foreign exchange settlement quotas and taxation are two different things.

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Many friends doing AdSense have similar confusion: Do I really need to pay taxes on this money? How do I pay? How do I fill out the W-8BEN form? Should I register a company? What happens if I mess up and get audited?

Disclaimer: This content is for reference only and does not constitute professional tax advice. Tax policies may change; consult professional tax advisors or local tax authorities for specific situations.

Tax Nature of AdSense Income: What Category Does Your Income Fall Into?

Bottom line first: As a Chinese resident, income you receive from AdSense must be taxed, no exceptions.

China’s Global Tax Principle

According to Article 7 of the Individual Income Tax Law, resident individuals who derive income from outside China need to pay individual income tax according to law. The definition of “resident individual” is quite broad: as long as you have a domicile in China, or reside in China for a cumulative 183 days or more in a tax year, you qualify.

I used to think foreign income didn’t need to be managed as long as it wasn’t converted back to China. Later, after consulting a tax advisor, I learned this was a huge misconception. Tax filing looks at when the income occurs, and has nothing to do with when or whether you convert the currency.

Starting in 2024, tax authorities in various regions have significantly strengthened supervision of foreign income. Bank currency exchange data is now networked with tax systems—don’t take chances.

AdSense Income Classification: Individual vs Sole Proprietor

How AdSense income is classified under tax law mainly depends on whether you receive payment as an individual or have registered as a sole proprietor or company.

Individual Payment (Most People’s Situation):

• Income nature: Labor remuneration income
• Withholding tax rate: 20%-40%
• During annual settlement: Merged into comprehensive income, subject to 7-tier progressive tax rate of 3%-45%
• Deductible: Basic deduction of 60,000 CNY + special deductions (social insurance) + special additional deductions (child education, mortgage, etc.)

Sole Proprietor/Company Payment:

• Income nature: Business income
• Tax rate: 5-tier progressive rate of 5%-35%
• Deductible: Business costs (domain, server, promotion, etc.)
• Risk: Approved collection policy unstable, supervision tightening

For example, assume your monthly income is $1,000 USD (approximately 7,200 CNY), totaling 86,400 CNY annually:

• Individual filing: Prepayment of approximately 11,500 CNY, may receive refund or pay additional tax during annual settlement
• Sole proprietor filing: If approved collection is available (3%-5% rate), only need to pay 2,500-4,300 CNY

Sounds like sole proprietor is attractive? Wait, don’t rush to register. Viya and Xueli’s tax cases involved improper use of sole proprietorships to avoid taxes, resulting in fines of tens of millions. Moreover, many places have now canceled approved collection and switched to audited collection, where the tax burden may not be lower.

Three Common Misconceptions to Avoid

Misconception 1: Foreign income doesn’t need to be reported
Wrong! As long as you’re a Chinese tax resident, global income must be declared.

Misconception 2: No need to pay taxes within the annual $50,000 USD exchange quota
$50,000 USD is the foreign exchange settlement quota, completely unrelated to taxation. Even if you don’t exchange any money, you still need to pay the taxes owed.

Misconception 3: Small income amounts won’t be investigated
Data is now networked; banks and payment platforms report data to tax departments. Regardless of amount, compliance is most important.

Key Point: Filing period is March 1 to June 30 of the following year. If you had AdSense income in 2024, you must file between March-June 2025.

W-8BEN Form: Key to Avoiding 30% US Withholding Tax

This form must be filled out, or you’ll be stuck with a 30% withholding. When I first started with AdSense, I had no idea about this. A month later, when I checked my income report, the tax deduction column showed 30%—it was heartbreaking.

Why You Must Fill Out W-8BEN

US tax law stipulates that when paying income to non-US residents, 30% of tax must be withheld by default. As a US company, Google is legally required to do this.

However, there is a tax treaty between China and the US. According to Article 7 of the treaty, if you don’t provide services within the US (e.g., you’re in China and your website server isn’t in the US), the tax rate can be reduced to 0%.

The W-8BEN form is used to certify:

1. I’m not a US resident
2. I meet the conditions of the tax treaty
3. Please settle my payment at 0% tax rate

If you don’t fill out this form, Google doesn’t know your situation and can only withhold 30%. Assuming your monthly income is $1,000 USD, without the form you only get $700, but with it you get $1,000. Over a year, the difference is $3,600 USD, approximately 26,000 CNY at current exchange rates.

W-8BEN Form Field-by-Field Completion Guide

Log into AdSense dashboard → Payment → Manage settings → US tax information → Add tax information, select W-8BEN form (for individuals).

Part 1: Personal Information

• Individual name: Your name in pinyin (Zhang San)
• Country of citizenship: China
• Permanent residence address: Your actual residential address (can use pinyin or English)
  • Example: Building 3, No.123 Zhongshan Road, Haidian District, Beijing
• Mailing address: If same as residential address, check “Same as above”

Part 2: Foreign Taxpayer Identification Number

• Foreign TIN: Your ID card number (18 digits)
• Although marked “optional”, strongly recommended to fill out, or tax rate may not reduce

Part 3: Tax Treaty Application (Critical!)
This part must be filled correctly:

• “Do you want to claim tax treaty benefits?”: Select Yes
• “Country/Region”: Select China
• “Article and paragraph”: Select Article 7, Paragraph 1 (business profits clause)
• “Withholding rate”: Enter 0%
• “Type of income”: Select “Advertising Revenue” or “Other”
• “Reason for treaty benefit”: Check first option (I am a resident of the treaty country)

Part 4: Signature

• Signature: Sign with mouse or enter name in pinyin
• Date: Enter today’s date

Usually approved within minutes to hours after submission. If rejected, check if taxpayer identification number and tax treaty sections were filled incorrectly.

Singapore Tax Information Must Also Be Filled

Starting October 2023, Google also requires users in the Asia-Pacific region to submit Singapore tax information. This is because AdSense income for China region is paid from Google Singapore branch.

If you don’t fill out this form, Singapore will withhold 24%.

Completion steps:

1. Enter AdSense dashboard → Payment → Singapore tax information
2. Select “I have tax treaty eligibility”
3. Upload “Certificate of Chinese Tax Resident Status”

How to Apply for “Certificate of Chinese Tax Resident Status”:

• Apply to your local tax authority (usually where you’re registered or reside)
• Required materials: ID card, proof of residence, AdSense income proof
• Processing time: 2-4 weeks
• Cost: Free or minimal administrative fee

To be honest, this certificate is a bit troublesome to obtain and requires visiting the tax bureau. But once obtained it can be used for many years, and it saves 24% tax, so it’s worth it.

If you don’t have time now, at least fill out the W-8BEN form first to reduce the US 30%. You can supplement the Singapore part later.

What If You Fill It Out Wrong

The form can still be modified after submission. Go to tax information page, click “Manage tax information”, and resubmit.

But note: Modifications after the 20th of each month may affect current month’s income settlement, delaying to next month. Recommend getting it done before the 15th of each month.

Foreign Exchange Income Settlement and Compliance Points

AdSense money is in USD, ultimately needs to be converted to CNY for use. This process is called “foreign exchange settlement”, and many people don’t understand the relationship between settlement and taxation.

Settlement Quota: What Does $50,000 USD Mean

Individuals have an annual convenient settlement quota of $50,000 USD. Within the quota, you can go to the bank with your ID card to settle, no additional proof materials needed.

But this quota is only a foreign exchange management regulation, has nothing to do with taxation.

Many people mistakenly think: “If I settle less than $50,000 USD per year, I don’t need to pay taxes.” Completely wrong. Even if you don’t exchange any money and keep USD in your account, you still owe personal income tax.

Conversely, if you settle more than $50,000 USD, it’s not impossible, just requires providing income proof, contracts and other materials, making the process more troublesome.

Settlement ≠ Tax Exemption

Emphasize again:

• Settlement: Process of converting foreign currency to CNY, supervised by Foreign Exchange Administration
• Taxation: Taxing income, supervised by Tax Bureau

These are two independent matters. Banks won’t withhold tax when you settle, but banks will report settlement data to tax authorities. Tax authorities seeing you have foreign exchange income will pay attention to whether you’ve filed taxes.

Starting in 2024, many local tax bureaus began proactively contacting taxpayers based on bank settlement data. If you’ve settled tens of thousands of USD but haven’t declared foreign income, you’ll likely receive a “friendly reminder” from tax authorities.

How to Settle Most Conveniently

Recommended approach: Use one fixed bank for settlement, convenient for management and record checking.

After AdSense payment arrives (usually Western Union or wire transfer), you have two choices:

Method 1: Automatic settlement upon wire transfer arrival

• If your receiving account is a CNY account, bank automatically settles at day’s exchange rate
• Advantage: Convenient
• Disadvantage: Exchange rate may not be optimal

Method 2: Receive to USD account first, choose timing for settlement yourself

• Open USD account, AdSense payment goes to USD account first
• Monitor exchange rate yourself, settle when you think it’s suitable
• Advantage: May get better exchange rate
• Disadvantage: Need to watch rates, more hassle

I use Method 1 myself. Although I might lose a bit on exchange rate difference, it’s worry-free. AdSense income is already unstable; no need to spend too much energy on exchange rates.

Keeping Settlement Vouchers Is Important

After each settlement, the bank gives you a settlement voucher (paper or electronic). This voucher must be kept, at least 5 years.

Two reasons:

1. Tax filing requires proof of income amount
2. If tax authorities audit, vouchers are evidence

Settlement vouchers show:

• Settlement date
• Settlement amount (USD and CNY)
• Day’s exchange rate
• Fund purpose

Recommend selecting “Labor remuneration” or “Other current account income” for fund purpose, fill truthfully.

Special Note on China Merchants Bank Foreign Remittance Receipt

There’s a pitfall using CMB to receive AdSense money: CMB has strict audits for foreign remittances and may require you to provide income proof, contracts and other materials.

If you encounter this situation, you can:

1. Log into AdSense dashboard, screenshot income report as proof
2. If contract needed, explain this is Google AdSense ad revenue sharing, no paper contract, provide AdSense agreement link
3. If still doesn’t work, try ICBC or Bank of China, which have relatively looser audits

To be honest CMB is quite troublesome on this point. I later switched to ICBC and basically encountered no problems.

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Personal Income Tax Calculation: How Much Tax Do You Actually Pay?

This part is most headache-inducing, involving withholding prepayment and annual settlement. I’ll try to explain clearly using plain language and actual examples.

Labor Remuneration Withholding Prepayment (Withheld by Payer)

Strictly speaking, AdSense money is paid directly to you by Google, and Google should withhold Chinese tax. But in reality, Google as a foreign company won’t withhold Chinese tax for you; you need to file this tax yourself.

However, we still need to understand the withholding prepayment algorithm because it’s used in annual settlement.

Labor Remuneration Withholding Prepayment Formula:

1. Single income ≤ 4,000 CNY: Taxable income = Income - 800 CNY
2. Single income > 4,000 CNY: Taxable income = Income × (1 - 20%)

Tax rate:

• Taxable income ≤ 20,000 CNY: 20% rate
• 20,000 < Taxable income ≤ 50,000 CNY: 30% rate, quick deduction 2,000
• Taxable income > 50,000 CNY: 40% rate, quick deduction 7,000

Example 1: Your AdSense income for a month is $1,000 USD (approximately 7,200 CNY)

• Taxable income = 7,200 × (1 - 20%) = 5,760 CNY
• Prepaid tax = 5,760 × 20% = 1,152 CNY

Example 2: Your monthly income is $5,000 USD (approximately 36,000 CNY)

• Taxable income = 36,000 × 80% = 28,800 CNY
• Prepaid tax = 28,800 × 30% - 2,000 = 6,640 CNY

Seems like high tax rate? Don’t worry, this is just prepayment. Annual settlement will recalculate, with refunds or additional payments.

Annual Settlement (Recalculation)

Every March-June, you need to combine all comprehensive income for the year (wages, labor remuneration, manuscript fees, royalties) and recalculate tax payable.

Comprehensive Income Tax Rate (7-tier Progressive):

Calculation Formula:
Tax payable = (Annual comprehensive income - 60,000 CNY - Special deductions - Special additional deductions - Other deductions) × Applicable rate - Quick deduction

Example: Mr. Li’s 2024 income situation

• Wage income: 60,000 CNY
• AdSense income: 86,400 CNY (average $1,000 USD × 12 months)
• Social insurance: 12,000 CNY
• Special additional deductions (child education + mortgage): 24,000 CNY

Calculation process:

1. Annual comprehensive income = 60,000 + 86,400 = 146,400 CNY
2. Taxable income = 146,400 - 60,000 (basic deduction) - 12,000 (social insurance) - 24,000 (special additional deductions) = 50,400 CNY
3. Tax payable = 50,400 × 10% - 2,520 = 2,520 CNY

If his wages already had some tax withheld, and AdSense income also had some prepaid as labor remuneration, settlement may result in refund or additional payment.

Actual Tax Burden for Different Income Levels

I calculated tax burdens for several common income levels for your reference (assuming only AdSense income, no other income):

Monthly income $500 USD (approximately 43,000 CNY annually):

• Taxable income = 43,000 - 60,000 = -17,000 (negative)
• Actual tax: 0 CNY (annual income under 60,000, tax-free)

Monthly income $1,000 USD (approximately 86,000 CNY annually):

• Taxable income = 86,000 - 60,000 = 26,000 CNY
• Tax payable = 26,000 × 3% = 780 CNY
• Effective rate: 0.9%

Monthly income $3,000 USD (approximately 260,000 CNY annually):

• Taxable income = 260,000 - 60,000 = 200,000 CNY
• Tax payable = 200,000 × 20% - 16,920 = 23,080 CNY
• Effective rate: 8.9%

Monthly income $5,000 USD (approximately 430,000 CNY annually):

• Taxable income = 430,000 - 60,000 = 370,000 CNY
• Tax payable = 370,000 × 25% - 31,920 = 60,580 CNY
• Effective rate: 14.1%

As you can see, the actual effective tax rate calculated is much lower than the 20%-40% withholding rate. Especially with special additional deductions, tax burden is even lower.

Foreign Tax Credit

If you’ve already paid tax abroad (in the US or Singapore), you can claim credit when filing in China.

Credit limit = Foreign income × China applicable rate

Assuming your AdSense income was withheld 24% in Singapore, annual income 100,000 CNY, China rate 10%:

• Credit limit = 100,000 × 10% = 10,000 CNY
• Singapore tax paid = 100,000 × 24% = 24,000 CNY
• Actual creditable = 10,000 CNY (cannot exceed limit)
• Excess 14,000 CNY can be carried forward for 5 years

But if you correctly filled out W-8BEN and Singapore tax information, you basically won’t encounter this problem because withholding rate has been reduced to 0%.

Personal Income Tax Filing Practice: Step-by-Step Tutorial

When actually starting to file, many people get nervous. Actually using the Personal Income Tax APP, the entire process can be completed in 20 minutes.

Filing Time and Entry

Time: March 1 to June 30 of following year

• March 1-15 requires advance appointment
• Recommend filing after March 15, no appointment needed

Preparation:

1. Download “Personal Income Tax” APP (available in all app stores)
2. Register and complete real-name authentication (facial recognition)
3. Bind bank card (for tax refund or payment)

Complete Foreign Income Filing Process

After opening Personal Income Tax APP, follow these steps:

Step 1: Enter filing entry

• Homepage select “Comprehensive Income Annual Settlement”
• Note: If you have foreign income, select “Applicable for Obtaining Foreign Income” entry
• Select filing year (e.g., March-June 2025 file for 2024)

Step 2: Select filing method
System provides two methods:

• Simplified filing: System has your income data, one-click confirmation
• Standard filing: Need to fill in income details yourself

If you only have AdSense foreign income, usually need to select “Standard filing” because system doesn’t have your foreign income data.

Step 3: Fill in foreign income information

Click “Foreign Income” column, start filling:

• Income type: Select “Labor remuneration income”
• Country/Region: Select “United States” or “Singapore” (depending where your AdSense pays from)
• Income amount: Fill in annual total income (USD converted to CNY)
  • Exchange rate use: Can use annual average rate, or by each transaction date rate
  • Annual average rate can be checked on State Administration of Foreign Exchange website
  • Example: 2024 annual income $10,000 USD, annual average rate 7.1, fill 71,000 CNY
• Foreign tax paid: If no tax withheld abroad, fill 0
  • If tax was withheld (e.g., Singapore 24%), need to fill and provide tax payment proof

Step 4: Fill in other income
If you also have domestic wages, manuscript fees etc., system will automatically display, verify accuracy.

Step 5: Fill in deduction items

This step is important, directly affects tax payable:

• Basic deduction: 60,000 CNY (automatically filled by system)
• Special deductions: Social insurance (if you have wage income, system automatically displays)
• Special additional deductions: Manually add or confirm
  • Child education: 1,000 CNY/month per child (12,000 CNY annually)
  • Continuing education: 400 CNY/month for academic education
  • Mortgage interest: 1,000 CNY/month (12,000 CNY annually)
  • Housing rent: 1,500 CNY/month (first-tier cities)
  • Elderly support: 3,000 CNY/month for only child (36,000 CNY annually)
  • Infant care: 2,000 CNY/month per infant (under 3 years old)

These deduction items need to be pre-filled in APP, or filled on-site during filing.

Step 6: Calculate tax payable/refundable
System automatically calculates. Result may be:

• Tax payable: Need online payment (supports WeChat, Alipay, bank card)
• Tax refundable: Fill in bank account, wait for tax bureau refund (usually 10-30 working days)
• Neither payment nor refund: Click submit

Step 7: Submit filing
After verification, click “Submit filing”. If tax payment needed, complete payment; if refund, patiently wait for arrival.

Saving Filing Materials

No need to submit paper materials during filing, but keep following materials yourself as tax authorities may audit:

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1. AdSense income details:

   • Log into AdSense dashboard → Payment → Transaction records
   • Export annual income report (CSV or PDF format)

2. Bank settlement vouchers:

   • Electronic or paper vouchers for each settlement
   • Shows settlement date, amount, exchange rate

3. Foreign tax payment proof (if any):

   • If tax withheld in US or Singapore, need tax payment certificate
   • Usually tax documents issued by payer (Google)

4. Special additional deduction vouchers:

   • Child education: School admission notice or enrollment certificate
   • Mortgage interest: Purchase contract and loan contract
   • Housing rent: Rental contract and invoice
   • Elderly support: Elderly person’s ID or household registration

Keep these materials for over 5 years for verification.

Common Filing Errors to Avoid

Error 1: Incorrect income amount

• Wrong exchange rate used when converting USD to CNY
• Recommend using State Administration of Foreign Exchange published annual average rate or each transaction date rate

Error 2: Forgetting to declare special additional deductions

• Unnecessarily pay more tax
• Check if special additional deductions in APP have been filled before filing

Error 3: Wrong filing entry selected

• Foreign income must select “Applicable for Obtaining Foreign Income”
• Wrong selection may prevent foreign income from being filed

Error 4: Foreign tax credit calculated incorrectly

• Credit amount cannot exceed limit
• If unclear, recommend consulting tax advisor

Error 5: Not filing or filing late

• Filing after June 30 incurs late payment penalty (0.05% per day)
• Not filing may be investigated, with heavier fines

Do You Need to Register as Sole Proprietor or Company?

This is a question many people struggle with. Seems like registering as sole proprietor can reduce tax rate, but reality isn’t that simple.

Comparison of Three Methods

First look at comparison table:

When to Consider Registering Sole Proprietor

To be frank, most AdSense users don’t need to register as sole proprietor.

But if you meet following conditions, can consider:

1. Stable monthly income exceeding $5,000 USD (annual income 400,000+ CNY)

   • At this income scale, sole proprietor approved collection (if still available) may have advantage

2. Need to issue invoices

   • E.g., business cooperation requires invoices
   • Other business income needs invoice reimbursement

3. Location still has approved collection policy

   • Need to consult local tax bureau about this
   • Many places have canceled it

4. Have business costs to deduct

   • E.g., website server, domain, promotion costs etc.
   • Can deduct costs under audited collection mode

Risks of Registering Sole Proprietor

Risk 1: Approved collection policy unstable

• Starting 2021, Shanghai, Jiangsu and other areas gradually canceled approved collection
• After switching to audited collection, tax burden may not be lower than individual filing
• Having approved collection when you register doesn’t guarantee it’ll continue

Risk 2: Stricter supervision

• Viya and Xueli’s tax cases involved improper use of sole proprietorships to avoid taxes
• Tax departments now closely monitor such operations
• If no real business, just to avoid taxes, risk is high

Risk 3: Annual costs

• Sole proprietors must keep books and file taxes, need to hire bookkeeping service (annual fee 2,000-5,000 CNY)
• Even without income, must file zero returns each quarter
• Cancellation is also troublesome, requires tax clearance certificate

Risk 4: May be deemed improper tax planning

• If tax audit finds you set up multiple sole proprietorships to disperse income
• Or sole proprietorship has no real business premises, operations
• May be deemed tax evasion

Limited Company Even Less Necessary

Unless you want large-scale operations, such as:

• Team operation of multiple websites
• Other to-B business
• Plan to raise funds or bring in partners

Otherwise for individuals doing AdSense registering a company, cost too high benefit too small:

• Corporate income tax 25% + dividend personal income tax 20%, combined tax burden far higher than individual filing
• Annual bookkeeping cost thousands to tens of thousands
• Company cancellation more troublesome

My Recommendation

Based on different income levels:

Monthly income < $3,000 USD:

• Individual filing is fine, simple and convenient
• Actual tax burden not high (effective rate 5%-10%)
• No need to bother with sole proprietor

Monthly income $3,000-10,000 USD:

• Can consult local tax advisor
• Check if your location still has approved collection policy
• If yes, calculate which is better between approved collection and individual filing
• If no, individual filing is more convenient

Monthly income > $10,000 USD:

• Recommend finding professional tax advisor for planning
• May need to establish company for standardized operations
• But must ensure legal compliance, can’t fake approved collection

Core principle: Don’t set up shell sole proprietorships or companies just to save taxes, such operations have high risk. Tax compliance is more important than saving a few percentage points of tax.

Legal Tax-Saving Tips and Risk Prevention

Legal tax saving and tax evasion are two different things. Former is reducing tax burden within legal scope, latter can land you in jail.

5 Legal Tax-Saving Methods

Method 1: Maximize special additional deductions

This is the safest, most direct tax-saving method. 2024’s special additional deduction items include:

For example, you’re an only child, have one child, and a mortgage:

• Child education: 12,000 CNY
• Mortgage interest: 12,000 CNY
• Elderly support: 36,000 CNY
• Total: 60,000 CNY

If your annual income is 150,000 CNY, minus 60,000 CNY basic deduction, minus 60,000 CNY special additional deductions, taxable income is only 30,000 CNY, tax only 900 CNY (3% rate).

Method 2: Reasonably arrange income recognition timing

This method mainly targets situations with large income fluctuations. Personal income tax uses progressive tax rates; concentrating income in one year will apply higher tax rates.

For example, if you expect AdSense income to suddenly surge this year, can consider:

• December income arrives few days later, counted in next year (but this is hard to control)
• Or diversify some income through other channels

To be honest operation space isn’t large, AdSense payment timing is basically fixed, not something you can control at will.

Method 3: Keep business cost vouchers

If you registered sole proprietor, can deduct business-related costs:

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• Website domain fees (few hundred CNY per year)
• Server hosting fees (tens to hundreds of USD per month)
• Advertising promotion costs
• Office equipment depreciation
• Related training and learning expenses

Prerequisite is you actually incurred these expenses and have proper invoices. Fake invoices are criminal, absolutely don’t touch.

Method 4: Maximize foreign tax credit

If you were taxed abroad (US or Singapore), must apply for credit when filing, don’t waste it.

As mentioned earlier, credit limit = Foreign income × China applicable rate. Amount exceeding limit can be carried forward for 5 years.

Keep tax payment proof, upload or keep for verification when filing.

Method 5: Pay attention to local tax preferential policies

Some places have tax support policies for cultural creative industries, digital economy, such as:

• Startup subsidies
• Tax rebates
• Approved collection preferences (fewer and fewer)

Can consult local tax bureau or tax advisor to see if applicable policies exist.

But note: Don’t fabricate business or register addresses just to enjoy preferential policies, such operations have high risk.

4 Red Lines for Tax Compliance

Following behaviors are illegal, absolutely don’t touch:

Red Line 1: Concealing income and not filing

• Obviously have foreign income, pretend not to
• After investigation, in addition to back taxes there’s late payment penalty (0.05% per day), serious cases also fined
• Hubei’s Mr. Sun concealed foreign income, after investigation paid back taxes + fines totaling 1,413,000 CNY

Red Line 2: False declaration of deduction items

• Don’t have child education, mortgage, but falsely declare
• Forge rental contract to declare housing rent
• This is tax fraud, even more serious in nature

Red Line 3: Improper use of sole proprietorships for tax avoidance

• Set up shell sole proprietorships or individual enterprises
• No real business, just to exploit approved collection
• Viya fined 1.341 billion CNY, Xueli fined 65.55 million CNY, painful lessons

Red Line 4: Split income to multiple identities

• Use family members’ ID cards to open multiple AdSense accounts
• Disperse income to different accounts to reduce each account’s income
• This is typical tax evasion method, investigation means fines

How to Handle Tax Audit

If you receive inquiry or inspection notice from tax bureau, don’t panic:

1. Actively cooperate, truthfully explain

• Provide materials required by tax bureau (income details, bank vouchers etc.)
• Answer questions truthfully, don’t conceal or lie

2. Proactively supplement, seek leniency

• If indeed have omissions or errors, proactively supplement
• Proactively pay back taxes and late payment penalties
• According to Tax Collection Management Law, proactive supplementation can result in lighter or reduced penalties

3. Hire professionals when necessary

• Tax advisors can help sort out situation, prepare materials
• Lawyers can provide legal support in serious cases
• Don’t stubbornly confront tax bureau yourself

4. Keep all communication records

• Tax bureau’s notices, requirements, replies etc. must be kept
• Also backup materials you submitted yourself
• In case of subsequent review or litigation

2024-2025 Regulatory Trends

Finally, talk about current tax supervision situation:

Trend 1: Foreign income supervision significantly tightened

• Many local tax bureaus started proactively contacting individuals with foreign income
• Bank settlement data, payment platform data networked with tax systems
• Risk of being investigated for not filing increasingly high

Trend 2: Approved collection policy sharply tightened

• Economically developed regions like Shanghai, Jiangsu, Zhejiang basically canceled
• Remaining regions’ approved collection standards also increasing
• Path of saving tax through approved collection getting narrower

Trend 3: Digital economy tax supervision strengthened

• Self-media, online streamers, content creators become key supervision targets
• Platforms report creator income data to tax departments
• Cross-border payment data also within supervision scope

Trend 4: Penalties intensified

• Used to be small tax evasion maybe just back taxes
• Now often back taxes + late payment penalty + fines + credit record
• Serious cases transferred to judicial organs

My recommendation: Comply early, don’t take chances. Rather than being worried about investigation, better to honestly file and pay taxes. Once taxes owed are paid, you can sleep soundly.

Conclusion

After all this, the core is two words: compliance.

Do you need to pay taxes on AdSense income? Yes. How to pay? Fill out W-8BEN form to avoid foreign withholding tax, file foreign income through Personal Income Tax APP between March-June of following year, honestly pay taxes owed.

Many people think tax filing is very complicated, but actually the whole operation only takes 20 minutes. Key is taking the first step, don’t keep procrastinating.

Final recommendations:

1. If you haven’t filled W-8BEN yet, do it now

   • Save 30% US withholding tax, savings are earnings
   • Also fill Singapore tax information, save 24% Singapore withholding tax

2. Check if previous years have missed filings

   • If yes, proactively supplement
   • Earlier you supplement, less late payment penalty, lighter punishment

3. Value special additional deductions

   • Deduct everything you can, legally reduce tax burden
   • Child education, mortgage, elderly support etc., add up to tens of thousands in deductions

4. Monthly income exceeding $5,000 USD, recommend consulting tax advisor

   • When income scale is large, professional planning is very necessary
   • But must choose proper tax advisors, don’t engage in gray operations

5. Develop habit of keeping records

   • Keep income details, settlement vouchers
   • Verification materials keep at least 5 years

Tax compliance isn’t a burden, it’s protection that lets you create content with peace of mind. Once taxes owed are paid, you don’t need to worry about tax bureau knocking on your door one day.

Reminder again: This content is for reference only, doesn’t constitute professional tax advice. Tax policies may change; consult local tax bureau or professional tax advisors for specific situations. Wish everyone’s AdSense income keeps growing higher, tax handling smoother and smoother!

27 min read · Published on: Jan 9, 2026 · Modified on: Jan 22, 2026

Easton

Digital Media