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        China adopts revised individual income tax law

        Source: Xinhua| 2018-08-31 18:25:30|Editor: Li Xia
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        BEIJING, Aug. 31 (Xinhua) -- China's top legislature on Friday voted to adopt the revised Individual Income Tax Law in an effort to pursue fairer income distribution.

        Lawmakers approved the legislation at the end of a five-day bimonthly session of the National People's Congress (NPC) Standing Committee.

        The new law states that the minimum threshold for personal income tax exemption will be raised from 3,500 yuan (about 513 U.S. dollars) to 5,000 yuan per month or 60,000 yuan per year.

        It adds special expense deductions for items like caring for the elderly, children's education, continuing education, treatment for serious diseases, as well as housing loan interest and rent.

        The State Council should set the range, standards, and enforcement steps for the special expense deductions and then report to the NPC Standing Committee, the law stipulated.

        The law defines resident individuals and non-resident individuals as two types of taxpayers. In addition, the length of residence used to distinguish between the two groups will be adjusted to 183 days from the previous 365.

        Resident individuals refer to those who have a residence or reside in China for a total of 183 days in a tax year while receiving an income either from home or abroad. They should pay income tax in accordance with the law, it stated.

        Non-resident individuals are those who have no residence and reside in China for less than a total of 183 days in a tax year. They should pay their tax in accordance with the law if they receive an income in China.

        The tax year runs from Jan. 1 to Dec. 31, it stated.

        According to the law, the previous method of taxing monthly income will be replaced with a new calculation which focuses on taxing annual income.

        The law states that tax authorities should provide taxpayers with information on their income and withheld tax.

        The individual income tax was the third major contributor to China's total tax revenue, following value-added tax and enterprise income tax. In 2017, China collected individual income taxes worth nearly 1.2 trillion yuan, about 8.3 percent of the total tax revenue.

        The new law will come into force on Jan. 1, 2019 while part of the clauses including the minimum threshold for personal income tax exemption will go into force on Oct. 1 this year.

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