1. Collection Scope & Items
Individuals with or without habitations inside China who have resided in China for a full year should pay personal income tax in accordance with relevant regulations for income received inside and outside China. Individuals who neither have habitations nor reside in China or individuals who have no habitations but have resided in China for less than one year should pay personal income tax for income received inside China.
Personal income tax is a kind of income tax whose collection items is the income received by individuals (natural person).
2. Range of Tax Items and Rates
(1) A nine level progressive tax rate in excess of specific amount is applicable for the income of wages and stipends. The tax rates are:
| Progression |
Monthly Taxable Income |
Tax Rate |
Deduction |
| First Level |
Below 500 RMB |
5% |
0 |
| Second Level |
500-2,000 RMB |
10% |
25 |
| Third Level |
2,000-5,000 RMB |
15% |
125 |
| Fourth Level |
5,000-20,000 RMB |
20% |
375 |
| Fifth Level |
20,000-40,000 RMB |
25% |
1375 |
| Sixth Level |
40,000-60,000 RMB |
30% |
3375 |
| Seventh Level |
60,000-80,000 RMB |
35% |
6375 |
| Eighth Level |
80,000-100,000 RMB |
40% |
10375 |
| Ninth Level |
Above 100,000 RMB |
45% |
15375 |
(2) Applicable tax rates for production and operation incomes and incomes from contract operation and lease operation for enterprises and institutions received by individual business operators as well as production and operation incomes gained by individual solely-invested enterprises and partnership enterprises investors:
| Progression |
Annual Taxable Income |
Tax Rate |
Deduction |
| First |
Below 500 RMB |
5% |
0 |
| Second |
5,000-10,000 RMB |
10% |
25 |
| Third |
10,000-30,000 RMB |
20% |
1250 |
| Fourth |
30,000-50,000 RMB |
30% |
4250 |
| Fifth |
Above 50,000 RMB |
35% |
6750 |
(3) The applicable flat tax rates for writers' remuneration is 20%and a deduction of 30% of the tax amount payable is practiced in the collection.
(4) The applicable tax rate for service recompense income less legal charges is 20%. Additional collection is imposed to a one time abnormal high earning of service recompense.
| Progression |
Service Recompense Income |
Tax Rate |
AdditionalCollection |
| First |
The part below(including) 20,000 RMB |
20% |
|
| Second |
The part from 20,000 to 50,000 RMB |
20% |
50% |
| Third |
The part over 50,000 RMB |
20% |
100% |
(5) Applicable flat tax rate is 20% for incomes from interest, dividend, bonus, franchise user charges, property lease, incidental and other incomes.
Stating from November 1st 1999,a personal income tax is collected with a 20% tax rate on the interest income of RMB and foreign currency bank savings received by individuals from banking organizations that squares and pays the interest will serve as the withholding agents.
(6) As for earnings received by marketing staff in insurance enterprises, after the deduction of the actual amount of business operation tax and 30% of marketing expenses, a personal income tax is collected on the remaining amount based on the understanding that the income of one month is regarded as one time of service recompense.
3. Items of Taxable Incomes
(1) Wage and stipends incomes refer to wages, stipends, premium year-end raises, labor bonus, subsidies, allowances and other incomes related to appointment or employment received by individuals during the appointment or employment.
(2) Production and business operation incomes of individual business operators refer to:
- Incomes earned by individual business operators from production and business operation in industry, handicraft industry, architecture industry, communication and transportation industry, commerce, catering industry, service industry, repair industry as well as other industries.
- Incomes earned by individuals in school running, medical treatment, consulting and other paid service activities that are carried out after receiving licenses and approval from relevant governmental departments.
- Other incomes earned by individuals in individual business production and operation.
- Above are all kinds of taxable incomes related with the production and operation of individual business operators and individuals.
- Production and operation incomes gained by individual solely-invested enterprises and partnership enterprises investors are calculated with the reference to production and operation incomes of individual business operators.
(3) Incomes of contract operation and lease operation for enterprises and institutions refer to earnings in individual contract operation, lease operation, transfer-contract and transfer-lease, which include incomes received by individuals for each month or each time that has the same characteristics as wages and stipends.
(4) Service recompense is the income earned by individuals in designing, ornamentation, installation, cartography, chemical examination, testing, medical treatment, law, accounting, consulting, lecturing, news, broadcasting, translation, proof-reading, calligraphy and painting, sculpture, movie and television, sound recording, video recording, performing, acting, advertising, exhibition, technology service, introduction service, brokerage service, commission service and other kinds of services.
(5) Writers' remuneration is the income earned by individuals for the publication of his work in books, newspaper and periodicals.
(6) Income of franchise user charges refers to the income eared by individuals for providing the use of patented right, trademark right, copyright, non-patented technology and other franchises. Incomes earned from providing the use of copyright does not include writers' remuneration.
(7) Income of interest, dividend and bonus is the interest, dividend and bonus earnings from creditor's right and equity possessed by individuals.
(8) Property leasing income refers to the income earned by individuals from leasing architecture, land utilization right, machinery and equipment, vehicle and vessel as well as other properties.
(9) Property transference income refers to the income earned by individuals in transference of securities, equity, architecture, land use right, machinery and equipment, vehicle and vessel as well as other properties.
(10) Incidental income refers to income received by individuals in winning prize or lottery as well as other earnings of incidental characters.
Tax payable will be determined by taxation bureau in charge for items in personal earnings that are difficult to categorize.
4. Bases for of Taxable Incomes
(1) Taxable incomes of wages and stipends will be the remaining amount of monthly earnings less 800 RMB expenses and other deductible expenses permitted by local governments. For taxpayers that have no habitations but receives wages and stipends in China and taxpayers that have habitations in China but receives wages and stipends outside China, an additional deduction of extra expenses in value of 3,200 RMB is practiced after the deduction of 800 RMB.
(2) Taxable incomes from production and business operation of individual business operators will be the remaining amount of each tax year's total income minus cost, expenses and losses.
(3) Taxable incomes of contract operation for enterprises and institutions will be the remaining amount of each tax year's total income minus necessary expenses.
(4) Taxable incomes for service recompense, writers' remuneration, franchise user charges. And property leasing are calculated in the following ways: if each income item is not above 4,000 RMB ,a deduction of 800 RMB expense is allowed; if each income item is over 4,000RMB, 20% of the income will be deducted from the taxation base.
(5) Taxable incomes for property transference will be the remaining amount of property transference earnings less original value of the property and reasonable expenses.
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11℃-15℃
