Individual Income Tax Law of the Peoples Republic of China中华人民共和国个人所得税

Individual Income Tax Law of the Peoples Republic of China

1994.01.01

STANDING COMMITTEE OF THE NATIONAL PEOPLE'S CONGRESS

INDIVIDUAL INCOME TAX LAW OF THE PEOPLE'S REPUBLIC OF CHINA

(Adopted at the Third Session of the Fifth National People's Congress

on September10,1980,revised according to the"Decision on the Amendment of the Individual Income Tax Law of the People's Republic

of China"taken at the fourth meeting of the Standing Committee of

the Eighth National People's Congress on October31, 1993 to be effective on the January 1, 1994)

Article 1.Individuals who reside in the territory of China for a

full year or more no matter having or having not a residence therein

shall pay individual income tax according to this law on the income

gained within or outside the territory of China.

Individuals who have no residence and do not reside in China or

those who have no residence but live in China for less than a year

shall pay individual income tax according to this law on the income

gained within the territory of China.

Article 2.Individual income tax shall be levied on the following catagories of income:

1. Income from wages and salaries;

2.Income derived from production and business operations by individual households engaging in industry and commerce;

3.Income derived from contracting or leasing operations by enterprises or institutions;

4. Income from remuneration for personal services;

5. Income from remuneration to authors;

6. Income from royalties;

7. Income from interests, dividends and extra dividends;

8. Income from lease of property;

9. Income from transfer of property;

10. Chance income; and

11.Other kinds of income specified as taxable by the financial department of the State Council.

Article 3. Individual income tax rates:

1.Income from wages and salaries in excess of specified amounts

shall be taxed at progressive tax rates ranging from 5% to 45% (for

specific rates, see table 1 attached).

2.Income derived from production and business operations by individual households engaging in industry and commerce in excess

of specified amounts shall be taxed at progressive rates ranging from

5% to 35%(for specific rates, see table 2 attached)

3.Income derived from remuneration to authors shall be taxed at

the proportional tax rate of20% but with a reduction of 30% of the taxable amount.

4.Income derived from remuneration for personal services shall be taxed at the proportional tax rate of20%. In case where a single remuneration for the services is extremely high, additional tax may be levied.The specific methods of taxation shall be worked out by State Council separately.

For incomes from royalties,interests,dividends and extra dividends,leasing property, transfer of property, chance income and other incomes, a proportional tax rate of 20% shall be applied.

Article 4.The following categories of incomes shall be exempted from individual income tax:

1.Awards granted by provincial people's governments,ministries and commissions under the State Council and units of the Chinese People's Liberation Army above the division or foreign organizations and international organizations for achievements in science,education,technology,culture,public health, sports and environmental protection.

2.Interests derived from bank savings,State treasury bonds and financial bonds issued by the State.

3. Subsidies and allowances issued in an unified manner by the State.

4.Welfare benefits, pension cost for the disabled and for survivors

and relief payments.

5. Insurance proceeds.

https://www.sodocs.net/doc/273863423.html,itary severance pay and decommission or demobilization pay for cadres and soldiers of the armed forces.

7.Resettlement pay, serverance pay, retirement pay, pension retired

pay and retirement living allowances for cadres and workers according to State unified stipulations.

8.Income of diplomatic representatives,consulate officials and other people of foreign embassies and consulates in China who enjoy tax concessions according to relevant laws of China.

9.Income exempted from tax as stipulated in the international conventions to which the Chinese government is a party and in agreements it has signed.

10.Income approved as tax-free by the financial department of the State Council.

Article 5.Individual income tax shall be reduced with approval

for one of the following cases:

1.Income of disabled persons, lonely old people and families

of martyrs.

2. In cases of great losses caused by serious natural disasters.

3.Other cases as approved tax-free by the financial department of

the State Council.

Article 6.The amount of each category of taxable income shall be computed as follows.

1.For incomes from wages and salaries, a standard allowance of RMB 800shall be given for a person and amount in excess of the allowance shall be taxable.

2.Incomes derived by individual households engaging in industry and commerce from their production and business operations shall be taxed at he gross amount in a tax year after deducting costs, expenses and losses.

3.Incomes derived by enterprises and institutions from contracting

or leasing operations shall be taxed at the gross amount in a tax year after deducting expenses.

4.Incomes from remuneration for personal services,remuneration to authers,royalties and leasing of property shall be taxed at the

part in excess of RMB 800 if the monthly income does not exceed RMB 4, 000or at the part after deducting 20% as expenses if the monthly income exceeds RMB 4,000.

5.Incomes from transfer of property shall be taxed at the amount after deducting the original value of the property and reasonable expenses.

6.Incomes from interests,dividends and extra dividends shall be taxed at the full amount of each payment.

The part of donations by individuals to education and other public undertakings shall be deducted from the taxable income according

to the relevant regulations by the State Council.

Additional expenses shall be deducted for taxpayers who have no residence in the territory of China but derive income from wages and salaries obtained in China and for taxpayers who have residences in China but derive income from wages and salaries obtained outside the territory of China according to their average income levels,living levels and changes of exchange rates. The scope and standards of the deduction shall be formulated by the State Council separately.

Article7.The amount of individual income tax paid by taxpayers who derive income outside the territory of China may be deducted from their taxable income, but the amount of deduction shall not exceed the taxable amount of the income from outside the territory of China computed according to the provisions of this law.

Article8.For individual income tax, the income earner shall be

the taxpayer and the paying unit or persons shall be the withholding agent.Taxpayers who derive income from wages and salaries from two or more units and/or without a withholding agent are required to file tax returns and pay taxes themselves.

Article9.The tax withheld each month by a withholding agent and

the tax to be paid each mouth by a taxpayer personally filing a returns

must be paid to the State treasury with the tax returns being submitted to the tax authorities within the first seven days of the following month.

The taxable wage and salary shall be taxed on the monthly basis and

the tax amount payable shall be submitted to the State treasury by

the withholding agent or taxpayer personally with the tax returns being submitted to the tax authorities within the first seven days

of the following month.The tax amount payable from wages and salaries from certain special trade may be computed on an annual basis and paid in advance in monthly installments. The specific methods of computation and collection shall be worked out separately by

the State Council.

The tax amount payable on income derived from production and business operations by individual households engaging in industry and commerce shall be computed on an annual basis and paid in advance in monthly installments by withholding agents within the first seven

days of the following month and final settlement shall be made within three months from the end of the tax year, with a refund for

any overpayment or a supplemental payment for any deficiency.

The tax amount payable on income derived by enterprises and institutions from contracting or leasing operations shall be computed

on annual basis and paid and turned over to the State treasury by withholding agents with tax returns being submitted to the tax authorities within30days after the end of a tax year. If the taxpayers derive income from contracting or leasing operations by installments,the tax amount payable shall be paid in advance within seven days after each payment is obtained and final settlement shall be

made within three months after a tax year, with a refund for any overpayment or a supplemental payment for any deficiency.

Taxpayers who earn incomes from outside the territory of China must

pay the taxes due to the State treasury and submit the tax returns to

the tax authorities within 30 days after the end of each year.

Article10.All categories of income shall be computed in terms

of Renminbi.Income in foreign currency shall be taxed on the equivalent amount converted into Renminbi according to the foreign exchange rate quoted by the State Administration of Exchange Control

of the People's Republic of China.

Article11.A service fee of 2% of the amount of the tax withheld

shall be paid to the withholding agents.

Article12.The collection and management of individual income

tax shall follow the provisions of the "Provisions of the People's Republic of China on the Collection and Management of Taxes".

Article13.Rules for the implementation of this law shall

be formulated by the State Council.

Article14. The law shall be enforced as of the date of promulgation.

Table 1 Individual Income Tax Rates

(Applicable to income form wages and salaries)

Grade Monthly Taxable Income Rate (%)

1Not in excess RMB 500 5

2In excess of RMB 500 up to RMB2,00010

3In excess of RMB 2,000 up to RMB

5,00015

4In excess of RMB 5,000 up to RMB

20,00020

5In excess of RMB 20,000 up to

RMB 40,00010

6In excess of RMB 40,000 up to

RMB 60,00030

7In excess of RMB 60.000 up to

RMB 80,00035

8In excess of RMB 80,000 up to

RMB 100,00040

9In excess of RMB 100,00045

(Note:The monthly taxable income refers to the amount in excess the standard allowance of expenses of RMB800or additional expenses according to the provisions of Article 6 of this law.