Individual Income Tax Law of the People’s Republic of China — Full English Translation (2018 Revision)

Chapter I: General Provisions

Article 1 This Law is enacted for the purposes of regulating the administration of individual income tax collection, safeguarding the lawful rights and interests of taxpayers, and ensuring the state’s tax revenue.

Article 2 An individual who has a domicile in China, or who has no domicile but has resided in China for 183 days or more in a tax year shall be a resident individual and shall pay individual income tax on income derived from inside and outside China. An individual who has no domicile and does not reside in China, or who has no domicile but has resided in China for less than 183 days in a tax year shall be a non-resident individual and shall pay individual income tax on income derived from inside China.

Article 3 Individual income tax shall be levied on the following categories of income: (1) income from wages and salaries; (2) income from remuneration for personal services; (3) income from author’s remuneration; (4) income from royalties; (5) income from business operations; (6) income from interest, dividends, and bonuses; (7) income from lease of property; (8) income from transfer of property; (9) contingent income.

Article 4 Income from wages and salaries, remuneration for personal services, author’s remuneration, and royalties shall be aggregated as comprehensive income and subject to individual income tax on a consolidated basis. Other categories of income shall be taxed separately.

Chapter II: Taxable Income

Article 5 The taxable income of a resident individual shall be the balance of the comprehensive income received in each tax year after deducting the standard basic deduction of RMB 60,000, special deductions, special additional deductions, and other deductions determined in accordance with law. The taxable income of a non-resident individual from wages and salaries shall be the balance of monthly income after deducting RMB 5,000.

Article 6 The taxable income from business operations shall be the balance of the total income of each tax year after deducting costs, expenses, losses, and other deductions. The taxable income from interest, dividends, bonuses, and contingent income shall be the full amount of each payment.

Article 7 Special deductions include basic old-age insurance, basic medical insurance, unemployment insurance, housing provident fund, and other social insurance premiums paid by individuals in accordance with state provisions.

Chapter III: Tax Rates

Article 8 Comprehensive income shall be subject to progressive tax rates ranging from 3 percent to 45 percent. Income from business operations shall be subject to progressive tax rates ranging from 5 percent to 35 percent. Income from interest, dividends, bonuses, property lease, property transfer, and contingent income shall be subject to a proportional tax rate of 20 percent.

Article 9 The specific applicable tax brackets and tax rates for comprehensive income shall be as follows: the portion not exceeding RMB 36,000 shall be taxed at 3 percent; the portion exceeding RMB 36,000 but not exceeding RMB 144,000 shall be taxed at 10 percent; the portion exceeding RMB 144,000 but not exceeding RMB 300,000 shall be taxed at 20 percent; the portion exceeding RMB 300,000 but not exceeding RMB 420,000 shall be taxed at 25 percent; the portion exceeding RMB 420,000 but not exceeding RMB 660,000 shall be taxed at 30 percent; the portion exceeding RMB 660,000 but not exceeding RMB 960,000 shall be taxed at 35 percent; the portion exceeding RMB 960,000 shall be taxed at 45 percent.

Chapter IV: Computation of Tax Payable

Article 10 The individual income tax payable on comprehensive income shall be the balance of the taxable income multiplied by the applicable tax rate less the quick deduction. The tax payable on business operations shall be the balance of the taxable income multiplied by the applicable tax rate less the quick deduction.

Article 11 Where a resident individual derives comprehensive income, individual income tax shall be calculated on an annual basis; the withholding agent shall withhold and prepay tax on a monthly or per-time basis. An annual reconciliation shall be carried out between March 1 and June 30 of the following year.

Chapter V: Special Additional Deductions

Article 12 Special additional deductions include: (1) expenses for children’s education; (2) expenses for continuing education; (3) medical expenses for serious illness; (4) housing loan interest; (5) housing rent; (6) expenses for supporting the elderly. The specific scope, standards, and implementation steps shall be determined by the State Council.

Article 13 Expenses for children’s education shall be deducted at the standard of RMB 1,200 per month per child. Expenses for continuing education shall be deducted at the standard of RMB 400 per month or RMB 3,600 per year. Medical expenses for serious illness exceeding RMB 15,000 shall be deducted based on actual amounts up to RMB 80,000.

Article 14 Housing loan interest shall be deducted at the standard of RMB 1,000 per month. Housing rent shall be deducted at standards ranging from RMB 800 to RMB 1,500 per month depending on the city. Expenses for supporting the elderly shall be deducted at the standard of RMB 2,000 per month.

Chapter VI: Foreign Tax Credit

Article 15 Where a resident individual derives income from outside China and has paid individual income tax on such income outside China, the foreign tax paid may be credited against the individual income tax payable in China, provided that the credit amount shall not exceed the amount of tax that would otherwise be payable under this Law on the same income.

Chapter VII: Administration and Collection

Article 16 The State Council shall be responsible for formulating the measures for the administration of individual income tax collection. Tax authorities shall strengthen the administration of individual income tax collection and establish a sound information management system.

Article 17 Withholding agents shall withhold and remit individual income tax in full and on time. Taxpayers shall file tax returns and pay taxes in accordance with law.

Article 18 Taxpayers who are required to carry out annual reconciliation shall file tax returns with the tax authorities within the prescribed period. Taxpayers shall be responsible for the truthfulness, accuracy, and completeness of the tax return information.

Article 19 Tax authorities shall have the authority to carry out tax inspections in accordance with law. Taxpayers and withholding agents shall accept inspections carried out by tax authorities in accordance with law, truthfully report the circumstances, and provide relevant information.

Article 20 Where a taxpayer or withholding agent fails to pay or underpays the tax payable, the tax authorities shall recover the tax payable and may impose a late payment penalty. Where a crime is constituted, criminal liability shall be pursued in accordance with law.

Chapter VIII: Supplementary Provisions

Article 21 The State Council may, based on the needs of national economic and social development, provide for reduction or exemption of individual income tax on specific categories of income.

Article 22 This Law shall come into force on January 1, 2019. The Individual Income Tax Law of the People’s Republic of China (2011 Revision) shall be repealed simultaneously.