A. Update
The lower and upper limit for National Health insurance contribution shall be adjusted as under:
| Year | Maximum amount of monthly compensation | Monthly premium limit (ER+EE portion) | Monthly remuneration lower limit | Minimum monthly premium (ER+EE portion) |
|---|---|---|---|---|
| FY2024 | 119,625,106 | 8,481,420 | 279,266 | 19,780 |
| FY2023 | 110,332,320 | 7,822,560 | 279,266 | 19,780 |
B. Statutory Compliance Release Date: January 2024
C. Effective Date: January 12, 2024
A. Update
The National Tax Service has amended the Simplified Income Tax Schedule for the year 2024, as provided under Article 194 of Enforcement Decree of the Income Tax Act.
The amendment states that for eligible families with children aged between 8 and 20 years, the following amounts must be deducted from the tax amount in the Earned Income Simplified Tax table to calculate the taxable amount:-
- For 1 child between the age of 8 and 20: KRW 12,500
- For 2 children between the age of 8 and 20: KRW 29,160
- For more than 2 children aged between of 8 and 20: KRW 29,160 for the first two children, plus KRW 25,000 for each additional child.
If the tax amount after deduction is negative, it should be considered as 0 won.
B. Statutory Compliance Release Date: February 29, 2024
C. Effective Date: March 01, 2024
A. Update
National Tax Service has amended the rates of income deductions, tax credits and income tax rates.
The revised rates are as follows:
| Tax Reduction/ Tax Credit | |
|---|---|
| Monthly Rent | Monthly rent paid to rent a house worth 400 million won or less |
| Child Tax Credit | Adjustment of age for child tax credit: 8 year or older |
| Education Expense | Addition of university admission application fee, college entrance examination fees |
| Donation | 10 million won or less: 15% Exceeding 10 million won: 30% Increased tax donation credit rate by 5% was for 2021 and 2022 only |
| Pension Account Deduction | ||
|---|---|---|
| Deduction Item | Individual Max Amount | Total Max Amount |
| Guarantee Of Workers Retirement Benefits Act | 9000000 | 9000000 |
| Pension Saving | 6000000 | |
| Tax Credit for Wage/ Salary Income | |
|---|---|
| Gross Wage & Salary income Bracket | Limitation of tax credit (Maximum Tax Credit) |
| Less than 33 million | 740000 |
| More than 33 million but less than 70 million | Maximum of [740,000-(total gross wage – 33M) X 0.8%, 660,000] |
| More than 70 million but less than 120 million | Maximum of [660,000-(total gross wage – 70M) X 50%, 500,000] |
| More than 120 million | Maximum of [500,000-(total gross wage – 120M) X 50%, 200,000] |
| Payment Method and Additional Deduction Classification | Rate |
|---|---|
| Credit card usage amount | 15% |
| Debit Card | 30% |
| Cash Receipt | 30% |
| Books, performances etc. January to March | 30% |
| Books, performances, movies etc. April to December | 40% |
| Traditional Market usage January to March | 40% |
| Traditional Market usage April to December | 50% |
| For use of public transportation | 80% |
| Income Tax Rate | |
|---|---|
| Tax base | Basic tax rate |
| Less than 14 million won | 6% of tax base |
| Exceeding 14 million won~ 50 million won or less | 840,000 won + 15% of the excess amount of 14 million won |
| Exceeding 50 million won~ 88 million won or less | 6.24 million won + 24% of the amount exceeding 50 million won |
| Exceeding 88 million won~ 150 million won or less | 15.36 million won + 35% of the excess amount of 88 million won |
| Exceeding 150 million won~ 300 million won or less | 37.06 million won + 38% of the amount exceeding 150 million won |
| Exceeding 300 million won~ 500 million won or less | KRW 94.06 million + 40% of the amount exceeding KRW 300 million |
| More than 500 million won~ less than 1 billion won | KRW 174.06 million + 42% of the amount exceeding KRW 500 million |
| Exceeding 1 billion won | 384.06 million won + 45% of the amount exceeding 1 billion won |
B. Statutory Compliance Release Date: December 18, 2023
C. Effective Date: January 01, 2024
A. Update
National Health Insurance Services announced the National health insurance rate will be frozen in 2024 i.e., no change for 2024 while Long term care insurance (LTCI) rate will be increased.
The revised rate of LTCI will be 0.9182% for the 2024 financial year.
B. Statutory Compliance Release Date: November 29, 2023
C. Effective Date: January 01, 2024
A. Update
Every July National Pension authority is announce the updates for the monthly limits for the National Pension Contribution Base is updated according to average national pension average subscriber income for 3 years.
The lower and upper limit announced in Year 2023 are as follows:
| Period | From July 01, 2022 to June 30, 2023 | July 01, 2023 to June 30, 2024 |
|---|---|---|
| Lower Limit | KRW 350,000 | KRW 370,000 |
| Upper Limit | KRW 5,530,000 | KRW 5,900,000 |
B. Statutory Compliance Release Date: April 05, 2023
C. Effective Date: July 01, 2023
A. Update
Home tax website published Year 2023 monthly simplified tax table provided under Enforcement Decree of the Income Tax Act Artical194 has been updated as below:
- Tax amount for the slabs has been changed.
- Additional tax deduction for children under specified age has been changed from 7 to 20 years old to 8 to 20 years old.
B. Statutory Compliance Release Date: March 09, 2023
C. Effective Date: February 28, 2023
A. Update
Revision regarding the extension of the applicable period for the flat income tax rate method, from five (5) years to twenty (20) years, under Article 18(2) of the Restriction of Special Taxation Act Article 18 (2) has been approved by the Korean National Assembly on December 23, 2022.
Therefore, foreign employees who are presently working in Korea can apply for flat rate which is 19% of income tax plus resident tax equal to 10% of income tax instead of normal tax rate from their ‘Date of Join’.
Date of Join means the first Korean employment date if the employee has started working after January 2014. However, if the employee has started working before 2014, then January 1, 2014, will be considered as the start date of Korean employment.
Please refer to Page 2 and 9 of the document provided in the link below.
B. Statutory Compliance Release Date: December 23, 2022
C. Effective Date: January 01, 2023
221223- 세제개편안
A. Update
Income Tax Law Article 12 update meal allowance non-taxable amount from KRW100,000 to KRW200,000 to ease the economic burden on workers, with effective from Tax Year 2023:
| Contribution | Year | Non-taxable amount |
|---|---|---|
| Meal allowance monthly non-taxable amount | 2023 | KRW 200,000 |
| 2022 | KRW 100,000 |
B. Statutory Compliance Release Date: October 31, 2022
C. Effective Date: January 01, 2023
A. Update
To accommodate the increase in medical cost incurred for elderly people, benefit coverage expansion policy and rise in healthcare service cost. National Health insurance Fund (NHIF) has announced the increase in the rate of contribution for Health care Insurance and Long-term care as per below for employees effective from Y2023:
| Insurance type | Year | Insurance rate | Employee | Employer |
|---|---|---|---|---|
| Health Insurance | 2023 | 7.09% | 3.545% | 3.545% |
| 2022 | 6.99% | 3.495% | 3.495% | |
| Long-term care Insurance | 2023 | (0.9082% of National health insurance premium) -------------------------------------------- Total Health Insurance rate |
||
| 2022 | 12.27% * Health Insurance premium | |||
Long-term care formula is changed as below effective from Y2023:
Before amendment: Health insurance premium * Long-term care rate
After amendment: Health insurance premium * long-term care rate / Total Health insurance rate
= Health insurance premium * 0.9082% / 7.09%
B. Statutory Compliance Release Date: November 28, 2022
C. Effective Date: January 01, 2023
A. Update
Every July, the monthly limits for the National Pension Contribution Base is updated according to average national pension average subscriber income for 3 years.
The lower and upper limit announced in Year 2022 are as follows:
| Coverage period | July 01, 2021, to June 30, 2022 | July 01, 2022, to June 30, 2023 |
|---|---|---|
| Lower Limit | KRW 330,000 | KRW 350,000 |
| Upper Limit | KRW 5,240,000 | KRW 5,530,000 |
For further details on the increase of the limits please refer the below link.
B. Statutory Compliance Release Date: April 1, 2022
C. Effective Date: July 1, 2022
A. Update
To accommodate the increased spending in job searching benefits to overcome COVID-19 and restore the financial soundness of the employment insurance found unemployment insurance rate have been raised effective from 2022.07.01:
| Contribution | Date | Insurance rate | Employee | Employer |
|---|---|---|---|---|
| Unemployment insurance | From 2022.07.01 | 1.8% | 0.9% | 0.9% |
| Until 2022.06.30 | 1.6% | 0.8% | 0.8% |
B. Statutory Compliance Release Date: December 31, 2021
C. Effective Date: July 01, 2022
A. Update
The lower and upper monthly limits for National Health insurance contribution shall be adjusted as under:
Maximum base amount: 104,536,481 KRW
Minimum base amount: 279,256 KRW
B. Statutory Compliance Release Date: January 2022
C. Effective Date: January 01, 2022
A. Update
To accommodate the increase in medical cost incurred for elderly people, benefit coverage expansion policy and rise in healthcare service cost. National Health insurance Fund (NHIF) has announced the increase in the rate of contribution for Health care Insurance and Long-term care as per below for employees effective from Y2022:
| Contribution | Year | Insurance rate | Employee | Employer |
|---|---|---|---|---|
| Health Care | 2022 | 6.99% | 3.495% | 3.495% |
| 2021 | 6.86% | 3.430% | 3.430% | |
| Long-term care | 2022 | 12.27% of health insurance | ||
| 2021 | 11.52% of health insurance | |||
B. Statutory Compliance Release Date: December 9, 2021
C. Effective Date: January 01, 2022
A. Update
According to the “Restriction of Special Taxation Act” Article 18-2, The sunset period of the flat tax rate has been extended from December 31, 2021, to December 31, 2023.
- Under the Tax Incentives Limitation Law, foreigners can elect a flat income-tax rate as an alternative to progressive income-tax rates when calculating individual income-tax liability on earned income.
- A flat tax rate of 19% (20.9% when including 10% of the local income tax surcharge) may be applied to gross earned income instead of the progressive individual income-tax rates, which range from 6% to 45% (6.6% to 49.5%, respectively, when including the local income tax surcharge).
- No income deductions, treatment of nontaxable income, or tax credits will be allowed if the flat tax rate method is elected.
- Application of the flat income tax rate election is limited to a maximum of five years from the start date of Korean employment.
B. Statutory Compliance Release Date: November, 2021
C. Effective Date: December 2, 2021
A. Update
The lower and upper monthly income limits for National Pension Contribution Base shall be adjusted as under:
| Monthly Limit | July 01, 2020 to June 30, 2021 | July 01, 2021 to June 30, 2022 |
|---|---|---|
| Lower | KRW 320,000 | KRW 330,000 |
| Upper | KRW 5,030,000 | KRW 5,240,000 |
B. Statutory Compliance Release Date: April 1, 2021
C. Effective Date: July 1, 2021
A. Update
The Ministry of Economy and Finance announced the Presidential Decree No. 31142 (‘Decree’) on February 17, 2021 which provides for amendment in Simplified Tax Table. As per Article 15 of the Decree, the updated Simplified Tax Table shall be applicable for taxes to be withheld from February 17, 2021 and onwards. Below mentioned are the changes in the Simplified Tax Table:
- For the calculation of child tax credit, the age limit of child for dependant count has been restricted to children aged 7 to 20 years old.
- New slab has been introduced in the Simplified Tax Table, as provided in the below table.
Table: Extract of Updated Simplified Tax Table (All figures are in Won)
| Monthly Wage & Salary (Excluding non-taxable income) | Monthly Tax |
|---|---|
| Over 10,000,000 less than 14,000,000 | Monthly withholding tax for 10,000,000 + 35% × (98% of the excess over 10,000,000) |
| Over 14,000,000 less than 28,000,000 | Monthly withholding tax for 10,000,000 + (1,372,000) + 38% × (98% of the excess over 14,000,000) |
| Over 28,000,000 less than 30,000,000 | Monthly withholding tax for 10,000,000+ (6,585,600) + 40% × (98% of the excess over 28,000,000) |
| Over 30,000,000 less than 45,000,000 | Monthly withholding tax for 10,000,000+ (7,369,600) + 40% × (100% of the excess over 30,000,000) |
| Over 45,000,000 less than 87,000,000 | Monthly withholding tax for 10,000,000+ (13,369,600) + 42% × (100% of the excess over 45,000,000) |
| Over 87,000,000 | Monthly withholding tax for 10,000,000+ (31,009,600) + 45% × (100% of the excess over 87,000,000) |
Please refer the attachment for the updated Simplified Tax Table.
B. Statutory Compliance Release Date: February 17, 2021
C. Effective Date: February 17, 2021
A. Update
The Ministry of Health and Welfare (MOHW) held the 4th Long-Term Care Committee to decide on an amendment to the long-term care fee and insurance premium rate. Accordingly, the long-term care insurance premium rate has been increased to be 11.52% for 2021, from 10.25% in 2020.
B. Statutory Compliance Release Date: September 08, 2020
C. Effective Date: January 01, 2021
A. Update
The Ministry of Health and Welfare (MOHW) held the fifteenth Health Insurance Policy Deliberation Committee to determine the health insurance premium rate for financial year 2021. It was decided to raise the health insurance premium rate by 2.89% in 2021. According to this health insurance premium rate adjustment, in 2021, the average monthly insurance premium rate will increase from 6.67% to 6.86%.
Employers and employees each will pay 3.43% (50% of the National Health Insurance Premiums). Long-term Care insurance is currently calculated as 10.51% of National Health Insurance premiums and the same has not been adjusted by MOHW yet.
B. Statutory Compliance Release Date: August 28, 2020
C. Effective Date: January 01, 2021
A. Update
The top individual income tax rate and income bracket under the Individual Income Tax Law is proposed to be adjusted as follows:
| Tax base (KRW) | Current Tax rates (Tax Year 2020) | Proposed Tax rates (Tax Year 2021) | Proposed Change |
|---|---|---|---|
| 12 million won or less | 6% | 6% | - |
| More than 12 million won, but not exceeding 46 million won | 15% | 15% | - |
| More than 46 million won, but not exceeding 88 million won | 24% | 24% | - |
| More than 12 million won, but not exceeding 46 million won | 15% | 15% | - |
| More than 88 million won, but not exceeding 150 million won | 35% | 35% | - |
| More than 150 million won, but not exceeding 300 million won | 38% | 38% | - |
| More than 300 million won, but not exceeding 500 million won | 40% | 40% | - |
| More than 500 million won, but not exceeding 1000 million won | 42% | 42% | - |
| More than 1000 million won | 42% | 45% | + 3% higher tax for this income slab |
B. Statutory Compliance Release Date: July 22, 2020
C. Effective Date: January 01, 2021
A. Update
The Ministry of Economy and Finance (MOEF) has proposed to tighten the qualifications of foreign engineers eligible for the existing employment income tax reduction. There would be no change to the current income tax reduction rate (50%/70%) allowed to the qualified foreign engineers for the first five years of service however, the scope of qualified R&D facilities where qualified engineers can work is proposed to be expanded to include in-house R&D centers or research departments of domestic corporations, government-funded research organizations etc. To qualify for the employment income tax deduction, qualified engineers must start to work in Korea no later than December 31, 2021 (December 31, 2022 for those employed by specified materials and parts companies). The proposed changes would apply to foreign engineers whose employment agreements are executed on or after January 01, 2021.
B. Statutory Compliance Release Date: July 21, 2020
C. Effective Date: January 01, 2021
A. Update
The Ministry of Economy and Finance (MOEF) released a package of tax reform proposals for 2020 to support the Korean economy and individuals to cope with hardships during the COVID 19 pandemic. As a part of the same package, for the year-end settlement to be done from January 01, 2021 (for the income earned during tax year 2020), the cap on basic deduction depending on earned income level has been proposed to be increased by KRW 0.3 million. Accordingly, the ceiling limits for basic deduction for credit card usage would be as under:
| Earned Income | Cap | |
|---|---|---|
| For YEA in 2021 (for income earned in 2020) | For YEA in 2022 (for income earned in 2021) | |
| KRW 70 million and Less | KRW 3.3 million | KRW 3 million |
| KRW 70 million ~ 120 million | KRW 2.8 million | KRW 2.5 million |
| In Excess of KRW 120million | KRW 2.3 million | KRW 2 million |
B. Statutory Compliance Release Date: July 22, 2020
C. Effective Date: January 01, 2020 (for year-end adjustment to be done in 2021)
A. Update
The authorities have amended the provisions of Article 126-2 (Income Deduction for Amount Spent on Credit Cards, etc.) of Restriction of special taxation Act and the same shall enter into force on May 19, 2020.
As per the above regulation, the authorities have increased the rates for the expenditure done through credit/debit cards etc. as per the below table w.e.f. April 1, 2020 till July 31, 2020, regardless of payment means, usage place, etc. to 80% in respect of purchases from all types of businesses. The amount of income deduction threshold remains the same.
From August 01, 2020, the tax deduction rate will resume to the original rate as provided in the table below.
| Spending | Till February 2020 | March 2020 | Between April and July 2020 | Between August and December 2020 |
|---|---|---|---|---|
| Paid by cash cards | 15% | 30% | 80% | 15% |
| Paid by cash or debit cards | 30% | 60% | 30% | |
| Paid in traditional markets or for public transportations | 40% | 80% | 40% |
B. Statutory Compliance Release Date: May 19, 2020
C. Effective Date: April 01, 2020 till July 31, 2020
A. Update
A Guide has been released by National Health Insurance Authority (NHIA) on Reduction in Health Insurance due to Covid-19.
The reductions are as under:
A. Area: Special Disaster Area (Daegu, Kyungsan, Cheongdo, Bonghwa)
Health Insurance Premium Amount: Not exceeding 86,920KRW
Reduction rate: 50%
Period: March to May 2020
B. Area: Other Areas
Health Insurance Premium Amount: Not exceeding 58,360KRW
Reduction rate: 50%
Period: March to May 2020
C. Area: Other Areas
Health Insurance Premium Amount: Exceeds 58,360KRW but does not exceed 74,210KRW
Reduction rate: 30%
Period: March to May 2020
The above update implies that for an employee who’s monthly NHI premium does not exceed 86,920 KRW and whose working place is in special disaster area, 50% of his/her monthly NHI premium will be reduced; likewise for others.
Since, this amendment is effective from March 2020, the retrospective adjustment should be made in April month.
B. Statutory Compliance Release Date: April 13, 2020
C. Effective Date: March 01, 2020
A. Update
The lower and upper monthly limits for National Pension Contribution shall be adjusted as under:
| Monthly Limit | July 01, 2019 to June 30, 2020 | July 01, 2020 to June 30, 2021 |
|---|---|---|
| Lower | KRW 310,000 | KRW 320,000 |
| Upper | KRW 4,860,000 | KRW 5,030,000 |
B. Statutory Compliance Release Date: April 07, 2020
C. Effective Date: July 01, 2020
A. Update
A press release was issued by Korean Ministry of Economy and Finance on the Comprehensive Measures to be taken for local economy for minimizing the ripple effects and early overcoming of Corona19.
As per it, for individuals, who are eligible for credit card deduction, a temporary increased tax deduction is granted for the usage for the period from March to June 2020.
Credit card deduction rate increases from 15% to 30%, debit card/cash receipt rate increases from 30% to 60%. Moreover, additional deduction for the expenditure used in traditional market and public transportation increases from 40% to 80%.
Additional deduction remains limited to KRW 1M for traditional market and public transportation, respectively.
Credit card deduction limit in total remains the same.
B. Statutory Compliance Release Date: February 28, 2020
C. Effective Date: March 01, 2020
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 announcement1 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
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 announcement1 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
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 announcement1 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
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 announcement1 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
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 announcement1 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
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 announcement1 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
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 announcement1 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.
