A. Update
In accordance with the Official State Council notice, as detailed in Notice Guo Fa [2023] No. 13, dated August 31, 2023, and in adherence to the relevant provisions of the Individual Income Tax Law of the People's Republic of China, the State Council has decided to increase the special additional deduction standards for individual income tax. This adjustment aims to alleviate financial responsibilities associated with supporting families, particularly in terms of infant care for children under the age of 3 and elderly parents. Here are the key points of this announcement:
- Increased deductions for parents with Infants:
The special deduction for the care of infants under 3 years old will be increased from 1,000 Yuan per month to 2,000 Yuan per infant. - Revised deduction for Children's education:
The special deduction for children’s education will be increased from 1,000 Yuan to 2,000 Yuan per child per month. - Support for Elderly Family Members:
Individuals responsible for the care of elderly family members, particularly those who are the only children, can now benefit from a monthly exemption of 3,000 Yuan from their taxable income. Those with siblings have the option to share this exemption and the amount shared by each person cannot exceed 1,500 Yuan per month. This deduction is applicable to taxpayers with a parent over the age of 60 or a grandparent whose children have passed away, representing a 1,000 Yuan increase from the previous deduction.
Other matters involved in the special additional deductions for the care of infants under 3 years old, children’s education, and supporting the elderly shall be implemented in accordance with the relevant provisions of the "Interim Measures for Special Additional Deductions for Individual Income Tax".
B. Statutory Compliance Release Date: August 31, 2023
C. Effective Date: January 1, 2023
A. Update
As an important part of the Social Security system, pension insurance is one of the most important insurance types. Pension insurance is a kind of social insurance system established by the Government according to relevant laws and regulation to guarantee the basic life of the workers after they reach the working age limit stipulated to relieve labor obligations or quit the labor due to old age and loss of working ability. The purpose is to protect the basic living needs of the elderly by means of social insurance and provide them with a stable and reliable source of living.
There are three main pillars in China pension insurance system.
The first pillar is Basic Pension Insurance, including basic Pension Insurance for urban workers and basic pension insurance for urban and rural residents, based on the basic insurance. The basic pension insurance adopts the mode of combining social pooling and personal account to reflect social mutual aid.
The second pillar is the Enterprise Pension and Occupational Pension, which are established by the employer and its employees. They mainly play a supplementary role.
The third pillar is the Individual Savings Pension Insurance and Commercial Pension Insurance, there is no national unified institutional arrangement.
Only Basic Pension Insurance was tax exempt for employees. To promote the construction of a multi-level and multi-pillar pension insurance system, promote the sustainable development of the pension insurance system, and meet the people's growing needs for diversified pension insurance, hereby Government put forward the tax exemption of personal pensions. Below is details of Personal Pension Insurance’s tax exemption details:
Tax Exemption item:Personal pension insurance
Limitation:RMB 12,000 / Year
Frequency:Any frequency
Applicable:It will be piloted in 36 cities/ regions and then promoted nationwide.
Please refer below link for 36 cities/regions list.
Above has been introduced in accordance with “the Social Insurance Law of the People's Republic of China”, “the Banking Supervision and Administration Law of the People's Republic of China”, “the Insurance Law of the People's Republic of China”, “the Securities Investment Fund Law of the People's Republic of China” and other laws and regulations, and with the consent of the CPC Central Committee and The State Council, China.
B. Statutory Compliance Release Date: November 25, 2022
C. Effective Date: January 1, 2023
A. Update
According to "Circular of The State Council on the Establishment of Special Additional Deduction of Individual Income Tax for Care of Infants under 3 Years Old"
- Taxpayers' expenses for taking care of infants and children under 3 years old shall be deducted according to the standard quota of 1000 yuan per month for each infant.
- Parents may choose to deduct 100% of the deduction standard from one parent or 50% of the deduction standard from both parents. The specific method of deduction cannot be changed within a tax year.
B. Statutory Compliance Release Date: March 28, 2022
C. Effective Date: January 1, 2022
A. Update
On March 17, 2021, vide Announcement No. 7 of 2021, the Ministry of Finance and the State Administration of Taxation has announced that the implementation period for ‘Donation Tax Policies for Epidemic Prevention and Control’, which was announced via Announcement No. 9 of 2020, has been extended to March 31, 2021.
B. Statutory Compliance Release Date: March 17, 2021
C. Effective Date: March 17, 2021
A. Update
State Administration of Taxation has further simplified the tax withholding method for some taxpayers. As per this announcement:
- A withholding agent (employer) will not be required to withhold individual income tax (IIT) from the wages and salaries of a resident individual whose annual employment income under the same employer in the preceding full year is less than CNY 60,000.
- However, once the accumulated wages or salaries of the employee have exceeded CNY 60,000 in a certain month, IIT will be withheld in that month and the remaining months of the current tax year considering the accumulated deduction at the annual rate of 60,000 yuan from January.
- The withholding agent is still required to file a tax return for the relevant resident individual, but should include a footnote in the tax return stating that "the annual income of the preceding year is less than CNY 60,000".
- The above withholding rule equally applies to income from personal labour services derived by a resident individual in respect of which the payer has a withholding obligation.
B. Statutory Compliance Release Date: December 04, 2020
C. Effective Date: January 01, 2021
A. Update
In order to further support stable employment and ensure employment, and reduce the tax burden of the new recruits' personal income tax withholding, the following is an announcement regarding the improvement and adjustment of the personal income tax withholding for those who obtain wages and salary income for the first time in the middle of the year:
- For a resident individual who obtains income from wages and salaries for the first time in a tax year, the withholding agent can calculate the cumulative standard deduction by multiplying 5000 Yuan per month by the number of months ending in the taxpayer's current year. This means that in the first month of employment of such first-time earners, cumulative standard deduction shall be granted starting from January till the month of tax withholding in a tax year.
For example, for a fresh graduate who commences employment on July 01, 2020 and receives the first salary for July, the deduction for that month will be the standard monthly amount of CNY 5,000 plus the accumulated deductions of CNY 30,000 for 6 months, from January to June, prior to the commencement of the first employment, i.e. CNY 35,000 in total. - If a student receiving full-time academic education obtains labor remuneration for internship, the withholding agent should withhold personal income tax in the erstwhile cumulative manner, without giving effect to this announcement. In short, this announcement is not applicable to interns.
- Employees who comply with the provisions of this announcement should promptly declare to the withholding agent/employer and truthfully provide the relevant supporting materials or undertakings. Such supporting materials or undertakings should be kept for future reference.
B. Statutory Compliance Release Date: July 28, 2020
C. Effective Date: July 01, 2020
A. Update
Rates and wage limits for the 6 insurances and Housing Fund have been updated by the local Authorities for some of the cities.
B. Consolidated on: July 14, 2020
C. Effective Date: July 01, 2020
A. Update
For Hubei Province, 100% exemption for Unemployment Insurance and Injury insurance has got extended till April 2021. Earlier, 100% exemption was granted to all the enterprises from February to June 2020 for Unemployment and Injury Insurance.
B. Statutory Compliance Release Date: May 12, 2020
C. Effective Date: July 01, 2020 till April 30, 2021
A. Update
The Ministry of Human Resource and Social Security has extended the period of exemption and reduction of employers' contributions for three social security insurances, i.e. employer's contribution to old-age pension insurance, unemployment insurance and work-related injury insurance, for all the provinces other than Hubei.
Under Public Notice [2020] No. 49, the period of exemption of social security contributions for small and medium-sized enterprises will be extended to the end of December 2020 and the period of 50% reduction of social security contributions for large enterprises will be extended to the end of June 2020.
Also, many provinces can continue to implement the lower limit of the individual insurance payment base of 2019 as the lower limit in 2020. The upper limit of the individual insurance payment base will be adjusted normally according to the regulations.
B. Statutory Compliance Release Date: June 22, 2020
C. Effective Date: May 01, 2020 till December 31, 2020
A. Update
At a meeting of the State Council, it was announced that the government had decided to exempt enterprises from, or reduce on their behalf, three social security contributions, namely:
- Old-age pension insurance,
- Unemployment insurance and
- Work-related injury insurance.
These measures are intended to mitigate the adverse effects of the outbreak of Coronavirus.
This unified reduction and exemption policies for all regions will be implemented from February. Also, the social security premiums collected in February can be refunded or offset against future contributions.
The exemption to contribute to the all the social security contributions by employers are as under:
- For Hubei Province, 100% exemption is granted to all the enterprises from February to June 2020 for Pension, Unemployment Insurance, and Injury. While for medical Insurance, 50% exemption is given to all the enterprises from Feb to June 2020 but such exemption does not include maternity insurance.
- For Shanghai Province/City, Medical Insurance changes from 9.50% to 9% from February to December 2020, while Maternity Insurance rate remains at 1%.
- For all other Provinces (other than Hubei and Shanghai): For Pension, Unemployment Insurance and Injury Insurance: 100% exemption is given to SMEs from February to June 2020 and 50% exemption is given to other enterprises from February to April 2020; For Medical Insurance: 50% exemption is given to all the enterprises from Feb. to June 2020 c. For Maternity Insurance: No change.
The above exemption shall be available from February 2020 to June 2020.
B. Statutory Compliance Release Date: February 18, 2020
C. Effective Date: February 1, 2020
A. Update
In order to support the prevention and control of the current novel coronavirus (2019-nCoV) outbreak, the Ministry of Finance, General Administration of Customs and the State Taxation Administration have issued several circulars to grant tax exemptions.
The relevant circulars are as under:
- Non-cash grants of medicine, medical products and preventive utensils provided by employers are not included in taxable income in computing individual income tax [Circular [2020] No. 10]
- Donations by individuals, through non-profit social organizations or people's governments, in cash or in kind for fighting the 2019-nCoV are fully deductible in computing individual income tax [Circular [2020] No. 9]
Circular [2020] No. 9 and No. 10 apply from Jan. 01, 2020 to an undefined date.
B. Statutory Compliance Release Date: February 06, 2020
C. Effective Date: January 01, 2020
A. Update
The Ministry of Finance and the State Administration of Taxation (SAT) issued a circular (Circular [2019] No. 99) updating the rules on the deduction of public welfare donations for individual income tax purposes. The main points are summarized below.
Deductible for income tax purposes
Payments made by individuals through designated non-profit organizations for public welfare purposes such as education and poverty alleviation are deductible in determining taxable income for individual income tax purposes.
Amount of donations
The amount of donations must be determined as follows:
- In the case of monetary donations, the amount of donations will be the actual amount donated;
- In the case of share equity or real estate, the amount of donations will be the original value of the property; and
- In the case of non-monetary assets other than share equity and real estate, the amount of donations must be based on the market value of the assets concerned.
Deductible from various types of income
Public welfare donations made by individuals may be deducted from the comprehensive income (wages and salaries, with the exception of year-end bonuses etc.). However, the deductible amount is limited to 30% of the annual taxable comprehensive income. Subject to a 30% ceiling, non-resident individuals may equally deduct their donations made through public welfare organizations from their Chinese source income.
Reporting
Individuals claiming deductions are required to file a form detailing the donations together with their tax return (or withholding tax return filed by a withholding tax agent) and keep the receipts from public welfare organizations for a period of 5 years.
