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Individual Income Tax Law revision decision




Decision of the Standing Committee of the National People's Congress on amending the Individual Income Tax Law of the People's Republic of China

(Adopted at the 5th Meeting of the Standing Committee of the 13th National People's Congress on August 31, 2018)

  The Fifth session of the Standing Committee of the 13th National People's Congress decided to make the following amendments to the Individual Income Tax Law of the People's Republic of China:

    一、Article 1 is amended to read: "An individual who has a domicile in China or who has no domicile and has resided in China for a total of 183 days in a tax year shall be a resident individual.。Individual residents shall pay individual income tax in accordance with the provisions of this Law on their income derived from sources within and outside China。

    An individual who has neither domicile nor residence in China, or who has no domicile and has resided in China for less than 183 days in a tax year, shall be a non-resident individual。Non-resident individuals shall pay individual income tax in accordance with the provisions of this Law on their income derived from within the territory of China。

    "A tax year shall begin on January 1 and end on December 31 of the Gregorian calendar。”

    二、Article 2 is amended as follows: "Individual income tax shall be paid on the following individual income:

    "(1) Income from wages and salaries;

    "(2) Income from remuneration for personal services;

    "(3) Income from remuneration;

    "(4) Income from royalties;

    "(5) income from business operations;

    "(6) income from interest, dividends and bonuses;

    "(7) Income from the lease of property;

    "(8) Income from the transfer of property;

    "(9) incidental income。

    "Individual residents who obtain income from items 1 to 4 of the preceding paragraph (hereinafter referred to as comprehensive income) shall calculate individual income tax on a consolidated basis for the tax year;When a non-resident individual obtains income from items 1 to 4 of the preceding paragraph, individual income tax shall be calculated on a monthly or itemized basis。Individual income tax shall be calculated separately in accordance with the provisions of this Law for taxpayers who obtain income from items 5 to 9 of the preceding paragraph。”

    三、Amend Article 3 as follows: "Individual income tax rates:

    "(1) For comprehensive income, a progressive tax rate of 3% to 45% shall be applied (the tax rate schedule is attached);

    "(2) Income from business operations shall be taxed at a progressive tax rate of 5 to 35 percent (the tax rate table is attached);

    "(3) Income from interest, dividends and bonuses, income from lease of property, income from transfer of property and incidental income shall be subject to a proportional tax rate of 20 percent。”

    四、Amend "exemption" in Article 4 to "exemption"。

    Add "retirement payment" after "demobilization fee" in Item 6。

    Amend "retirement salary and retirement salary" in item 7 to "basic pension or retirement fee and retirement fee"。

    Delete "Our country" in item 8。

    Item 10 is amended as follows: "Other tax-exempt income as prescribed by The State Council。”

    One paragraph is added as paragraph 2: "The tax exemption provisions in Item 10 of the preceding paragraph shall be reported by The State Council to the Standing Committee of the National People's Congress for the record。”

    五、Article 5 is amended as follows: "Individual income tax may be reduced under any of the following circumstances, the specific range and time limit shall be prescribed by the people's governments of provinces, autonomous regions and municipalities directly under the Central Government, and shall be reported to the Standing Committee of the people's Congress at the same level for the record:

    "(1) the income of disabled, lonely elderly persons and relatives of martyrs;

    "(2) Suffering heavy losses due to natural disasters。

    "The State Council may prescribe other tax reduction circumstances and report them to the Standing Committee of the National People's Congress for the record。”

    六、Article 6 is amended as follows: "Calculation of taxable income:

    "(1) For the comprehensive income of individual residents, the taxable income amount shall be the balance of the income of each tax year after deducting 60,000 yuan of expenses, special deductions, special additional deductions and other deductions determined according to law。

    "(2) For income from wages and salaries of non-resident individuals, the taxable income amount shall be the balance of monthly income after deducting 5,000 yuan from expenses;For income from remuneration for personal services, remuneration for writing and royalties, the amount of each income shall be the taxable income amount。

    "(3) The taxable income shall be the balance of the total income of each tax year after deducting costs, expenses and losses。

    "(4) If the income from the lease of property does not exceed 4,000 yuan, 800 yuan shall be deducted from the expenses;For more than 4,000 yuan, 20% of the expenses shall be deducted, and the remaining amount shall be the taxable income。

    "(5) For income from the transfer of property, the taxable income shall be the balance of the income from the transfer of property after deducting the original value of the property and reasonable expenses。

    "(6) Income from interest, dividends, bonuses and incidental income shall be the taxable income amount of each income。

    "The amount of income shall be the balance of income from remuneration for personal services, remuneration for writing and royalties after deducting 20% of fees。The amount of income derived from remuneration for writing articles shall be deducted by 70%。

    "Where an individual donates his income to public welfare and charitable undertakings such as education, poverty alleviation and poverty relief, the part of the amount of the donation that does not exceed 30% of the taxable income declared by the taxpayer may be deducted from his taxable income;Where The State Council stipulates full pre-tax deduction for donations to public welfare charities, such provisions shall prevail。

    "The special deduction provided for in item 1 of paragraph 1 of this article,Including social insurance premiums such as basic old-age insurance, basic medical insurance, unemployment insurance and housing provident fund paid by individual residents in accordance with the scope and standards prescribed by the State;Special additional deduction,Including children's education, continuing education, serious illness medical treatment, housing loan interest or housing rent, support for the elderly and other expenses,The specific scope, standards and implementation steps shall be determined by The State Council,It shall be submitted to the Standing Committee of the National People's Congress for the record。”

    七、Article 7 is amended as follows: "An individual resident may deduct the individual income tax already paid abroad from the amount of tax payable, provided that the amount of credit shall not exceed the amount of tax payable on the taxpayer's overseas income calculated in accordance with the provisions of this Law。”

    八、A new article is added as Article 8: "In any of the following circumstances, the tax authorities have the right to make tax adjustment in accordance with reasonable methods:

    "(1) Business transactions between an individual and his affiliates do not comply with the principle of independent transactions and reduce the tax payable by him or his affiliates, and there is no justifiable reason;

    "(2) An enterprise controlled by an individual resident or jointly controlled by an individual resident and a resident enterprise established in a country (region) where the actual tax burden is obviously low, without reasonable business needs, does not distribute or reduces the distribution of the profits corresponding to angelica belonging to individual residents;

    "(3) Individuals gain improper tax benefits by implementing other arrangements that do not have a reasonable commercial purpose.。

    "Where the tax authorities make tax adjustment in accordance with the provisions of the preceding paragraph and need to levy taxes in arrears, they shall levy taxes in arrears and charge interest in accordance with the law.。”

    九、Article 8 is changed into two articles, as Article 9 and Article 10 respectively, and amended as follows:

    "Article 9 The income tax shall be the taxpayer, and the unit or individual paying the income shall be the withholding agent。

    "If the taxpayer has a Chinese citizen identification number, the Chinese citizen identification number shall be the taxpayer identification number;If a taxpayer does not have a Chinese citizen identification number, the tax authorities shall grant the taxpayer identification number。When the withholding agent withholds the tax, the taxpayer shall provide the taxpayer identification number to the withholding agent。

    "Article 10 Under any of the following circumstances, a taxpayer shall file a tax return according to law:

    "(1) The acquisition of comprehensive income shall be subject to final settlement and settlement;

    "(2) There is no withholding agent for obtaining taxable income;

    "(3) when taxable income is obtained, the withholding agent fails to withhold the tax;

    "(4) Obtaining income from abroad;

    "(5) cancellation of Chinese household registration due to emigration;

    "(6) Non-resident individuals obtain wages and salaries from two or more sources within the territory of China;

    "(7) Other circumstances prescribed by The State Council。

    "The withholding agent shall, in accordance with the provisions of the State, complete the withholding declaration for all employees and provide taxpayers with information such as their personal income and the tax withheld.。”

    十、Article 9 is changed into four articles, which shall be regarded as Article 11, 12, 13 and 14 respectively, and amended as follows:

    "Article 11 The individual income tax shall be calculated on an annual basis when an individual resident obtains comprehensive income;If there is a withholding agent, the withholding agent shall withhold the withholding tax on a monthly or monthly basis.If it is necessary to handle the final settlement and payment, the final settlement and payment shall be handled between March 1 and June 30 of the following year。Measures for withholding and pre-payment shall be formulated by the competent tax department under The State Council。

    "Where individual residents provide special additional deduction information to the withholding agent, the withholding agent shall deduct the pre-paid tax in accordance with the provisions when withholding it on a monthly basis, and shall not refuse to do so.。

    "Income from wages and salaries, remuneration for labor services, remuneration for writing and royalties obtained by non-resident individuals, where there is a withholding agent, the withholding agent shall withhold taxes on a monthly or weekly basis, and shall not handle the final settlement。

    "Article 12 If a taxpayer obtains business income and calculates individual income tax on an annual basis, the taxpayer shall, within 15 days after the end of the month or quarter, submit a tax return to the tax authorities and pay the tax in advance.The income shall be settled and paid before March 31 of the next year。

    "Individual income tax shall be calculated on a monthly or episodic basis for income from interest, dividends and bonuses, income from lease of property, income from transfer of property and incidental income, and if there is a withholding agent, the withholding agent shall withhold the tax on a monthly or episodic basis。

    "Article 13 A taxpayer who obtains taxable income without a withholding agent shall submit a tax return to the tax authorities within 15 days of the next month after obtaining the income and pay the tax。

    "Where a taxpayer obtains taxable income and the withholding agent fails to withhold the tax, the taxpayer shall pay the tax before June 30 of the next year after the income is obtained;Where the tax authorities notify a deadline for payment, the taxpayer shall pay the tax in accordance with the deadline。

    Individual residents who obtain income from outside China shall declare and pay tax within the period from March 1 to June 30 of the following year。

    "Where a non-resident individual obtains income from wages and salaries from two or more places within the territory of China, he shall declare and pay tax within 15 days of the month following the income obtained。

    "Where a taxpayer cancels his Chinese household registration due to emigration, he shall handle the tax settlement before cancelling his Chinese household registration.。

    "Article 14 The tax withheld or withheld by withholding agents each month or each time shall be handed over to the state Treasury within 15 days of the following month, and the individual income tax return for withholding shall be submitted to the tax authorities。

    "Where a taxpayer handles the final settlement of the tax refund or the withholding obligation handles the final settlement of the tax refund for the taxpayer, the tax authority shall, after examination and verification, handle the tax refund in accordance with the relevant provisions on the administration of the Treasury.。”

    十一、Add one article as Article 15: "Public security, the People's Bank, financial supervision and management and other relevant departments shall assist tax authorities in confirming the identity of taxpayers and financial account information.。The relevant departments of education, health, medical security, civil affairs, human resources and social security, housing urban and rural construction, public security, the People's Bank of China, financial supervision and administration shall provide the tax authorities with special additional deduction information for taxpayers' children's education, continuing education, serious illness medical treatment, housing loan interest, housing rent, support for the elderly, etc。

    "Where an individual transfers real estate, the tax authority shall verify the individual income tax payable according to the relevant information such as the real estate registration, and the registration authority shall examine the tax payment certificate of the individual income tax related to the transfer of the real estate when handling the transfer registration.。Where an individual transfers equity for change registration, the market subject registration authority shall examine the personal income tax payment vouchers related to the equity transaction。

    "The relevant departments shall incorporate the compliance of taxpayers and withholding agents with this law into the credit information system according to law, and implement joint incentives or punishments.。”

    十二、Article 10 is changed to Article 16 and amended to read: "All income shall be calculated in Renminbi。Income in currencies other than RMB shall be converted into RMB according to the central parity rate of RMB exchange rate and tax shall be paid。”

    十三、Article 12 is changed to Article 18 and amended as follows: "The State Council shall formulate specific measures for the collection, reduction or suspension of individual income tax on interest income from savings deposits and shall report them to the Standing Committee of the National People's Congress for the record。”

    十四、A new article is added as Article 19: "Taxpayers, withholding agents, tax authorities and their staff who violate the provisions of this Law shall be investigated for legal responsibility in accordance with the Law of the People's Republic of China on the Administration of Tax Collection and other relevant laws and regulations.。”

    十五、Article 13 is changed to Article 20 and amended as follows: "The collection and administration of individual income tax shall be carried out in accordance with this Law and the Law of the People's Republic of China on the Administration of Tax Collection.。”

    十六、The individual income tax rate Table 1 (applicable to income from wages and salaries) is amended as follows:

Individual income tax rate Table 1

(Applicable to comprehensive income)


级数

Annual taxable income

税率(%)

1

Not exceeding 36,000 yuan

3

2

Over $36,000 to $144,000

10

3

More than $144,000 to $300,000

20

4

Over $300,000 to $420,000

25

5

Over $420,000 to $660,000

30

6

Over $660,000 to $960,000

35

7

Anything over $960,000

45

    (Note 1: The annual taxable income mentioned in this table refers to the balance of the comprehensive income obtained by an individual resident for each tax year after deducting 60,000 yuan of expenses, special deductions, special additional deductions and other deductions determined according to law in accordance with the provisions of Article 6 of this Law。

    Note 2: Income from wages and salaries, remuneration for services, remuneration for writing and royalties obtained by non-resident individuals shall be calculated as tax payable after monthly conversion according to this table。)

    十七、Table 2 of individual income tax rate (income from production and business operations of individual industrial and commercial households and income from contracted and leased operations of enterprises and public institutions) is amended as follows:

Individual income tax rate Table II

(Applicable to operating income)


级数

Annual taxable income

税率(%)

1

Not exceeding 30,000 yuan

5

2

More than 30,000 yuan to 90,000 yuan

10

3

Over 90,000 to 300,000 yuan

20

4

Over $300,000 to $500,000

30

5

Anything over $500,000

35

    (Note: The annual taxable income mentioned in this table refers to the balance after deducting costs, expenses and losses from the total income of each tax year in accordance with the provisions of Article 6 of this Law。)

    In addition, the order of articles has been adjusted accordingly。

    This decision shall take effect as of January 1, 2019。

    From October 1, 2018 to December 31, 2018,Taxpayers' income from wages and salaries,The taxable income amount shall first be the balance of monthly income minus expenses of 5,000 yuan, special deductions and other deductions determined by law,The tax shall be calculated and paid in accordance with the individual income tax rate Table 1 of Article 16 of this Decision (applicable to comprehensive income) after monthly conversion,No additional and subtractive expenses will be deducted;Income from production and operation of individual industrial and commercial households,Income from contracted or leased operations of enterprises and public institutions,The tax shall first be calculated and paid in accordance with the individual income tax rate Table 2 of Article 17 of this Decision (applicable to business income)。

    The Individual Income Tax Law of the People's Republic of China shall be amended accordingly and repromulgated in accordance with this Decision。