The State Council meeting on Wednesday adopted a decision to tax only 50% of the individual income of seafarers who work for a period of at least 183 days within a tax year on seagoing ships.
This means seafarers must spend at least 183 days sailing non-domestic waters in order to be eligible for the tax relief.
Effective until the end of 2023, the tax relief is aimed at enhancing the growth of shipping industry, China daily reported citing a statement Cabinet.
This is part of the country's goal to solidify its maritime power through the Maritime Silk Road, which requires a group of experienced seafarers.
The move follows a similar decision in India in 2017, another state leader in seafaring jobs.
The policy has been well-received by the country's shipping companies, with China COSCO Shipping announcing that this will serve as a boost to the country's shipping sector, as more than 40,000 sailors it employs will be able to enjoy an average tax cut of 80 to 90%.
China had nearly 1.58 million registered seafarers at the end of 2018, the largest number in the world, according to the 2018 China Seafarer Development Report by the Ministry of Transport, while about 100,000 are oceangoing.