For foreign employees in China, whether their  Social insurance & housing fund contributions are tax-deductible hinges on one thing: tax residency.

Resident (≥183 days): 

Contributions to basic pension, medical, unemployment insurance, and housing fund can be deducted from taxable income → lower IIT.

Non-resident (<183 days): 

These contributions cannot be deducted → higher taxable income.

Track your foreign employees’ physical presence in China carefully. The 183-day rule directly impacts IIT compliance and take-home pay. Consult a tax professional to apply it correctly.

Please note that:

While non-resident foreign individuals cannot deduct social insurance and housing fund contributions from their IIT calculation, certain other deductions are still allowed at present. For instance, actual rental costs (supported by a valid rental invoice) can be deducted from taxable income.