Implementing Regulations of the Individual Income Tax Law of the People's Republic of China (Revised in 2011)
Implementing Regulations of the Individual Income Tax Law of the People's Republic of China (Revised in 2011)
Implementing Regulations of the Individual Income Tax Law of the People's Republic of China (Revised in 2011)
Order of the State Council of the People's Republic of China No. 600
July 19, 2011
(Issued on January 28, 1994 in accordance with the Order No. 142 of the State Council of the People's Republic of China; revised for the first time under the Decision of the State Council on the Revision of the Implementing Regulations of the Individual Income Tax Law of the People's Republic of China made dated December 19, 2005; revised for the second time under the Decision of the State Council on the Revision of the Implementing Regulations of the Individual Income Tax Law of the People's Republic of China dated February 18, 2008; and revised for the third time under the Decision of the State Council on the Revision of the Implementing Regulations of the Individual Income Tax Law of the People's Republic of China dated July 19, 2011)
Article 1 These Regulations are enacted in accordance with the Individual Income Tax Law of the People's Republic of China (the "Individual Income Tax Law").
Article 2 For the purposes of the first paragraph of Article 1 of the Tax Law, "individuals who have a domicile in China" shall mean individuals who habitually reside within the territory of China by reason of their permanent residence or family or economic interests.
Article 3 For the purposes of the first paragraph of Article 1 of the Individual Income Tax Law, having "resided in China for one year or more" shall mean having resided in China for 365 days in a tax year. No deduction from that number of days shall be made for temporary exits out of China.
For the purposes of the preceding paragraph, "temporary exits out of China" shall mean departure from China for not more than 30 days on a single trip or not more than 90 days in aggregate on two or more trips within a tax year.
Article 4 For the purposes of the first and second paragraphs of Article 1 of the Individual Income Tax Law, "income derived from inside China" shall mean income sourced within China, and "income derived from outside China" shall mean income sourced from outside China.
Article 5 The following income shall be deemed as income sourced within China, regardless of whether or not it is paid within China:
1. Income from remuneration for personal services provided within China by reason of tenure of office, employment, contractual performance, etc.;
2. Income derived from lease of property to a lessee for use within China;
3. Income derived from transfer of constructions, rights to use land and other property located within China or from transfer conducted within China of any other property;
4. Income derived from licensing of any rights for use within China; and
5. Income from interest, dividends and bonuses derived from any company, enterprise or other economic organization or individual within China.
Article 6 Individuals who do not have a domicile in China but have resided in China for between one and five years may only pay individual income tax on that portion of their income sourced outside China that is paid by a company, enterprise or other economic organization or individual within China, subject to the approval of competent tax authorities; individuals who have resided in China for more than five years shall, commencing from the sixth year, pay individual income tax on all of their income sourced outside China.
Article 7 Individuals who do not have a domicile in China but who have resided in China for a consecutive or aggregate period of no more than 90 days in a tax year shall be exempted from individual income tax for that portion of their income sourced within China that is paid by an overseas employer and that is not borne by any organization or establishment of such overseas employer located within China.
Article 9 Measures for the levy of individual income tax on income from transfer of shares shall be separately formulated by the finance authority under the State Council and submitted to the State Council for approval of implementation.
Article 10 "Individual income" shall include cash, physical goods, negotiable securities and any other forms of economic gains. Where income is received in the form of physical goods, the taxable income shall be calculated based on the price indicated on the voucher received; in the absence of a voucher or where the price indicated on the voucher is clearly marked down, the taxable income shall be assessed by reference to the market price. Where income is received in the form of negotiable securities, the taxable income shall be assessed based on the face value and the market price thereof. Where income is received in any other form of economic gains, the taxable income shall be assessed based on the market price.
Article 11 For the purpose of Item 4 of Article 3 of the Individual Income Tax Law, that "a single income item under income from remuneration for personal services that is excessively high" shall mean that the taxable income amount of a single item of income derived by individuals from remuneration for personal services exceeds CNY20,000.
That portion of the taxable income amount described in the preceding paragraph that exceeds CNY20,000 but does not exceed CNY50,000 shall be subject to an additional levy of 50% of the tax payable amount calculated on such portion under the tax law; that portion that exceeds CNY50,000 shall be subject to an additional levy of 100%.
Article 12 For the purpose of Item 2 of Article 4 of the Individual Income Tax Law, "interest on national debt obligations" shall mean income from interest derived by individuals by virtue of holding bonds issued by the Ministry of Finance of the People's Republic of China; and "interest on financial bonds issued by the State" shall mean income from interest derived by individuals by virtue of holding financial bonds issued with the approval of the State Council.
Article 13 For the purpose of Item 3 of Article 4 of the Individual Income Tax Law, "subsidies and allowances given under uniform state regulations" shall mean special government allowances and allowances for members and senior members of the Chinese Academy of Sciences and those of the Chinese Academy of Engineering given in accordance with State Council regulations, as well as other subsidies and allowances to be exempted from individual income tax according to the regulations of the State Council.
Article 14 For the purpose of Item 4 of Article 4 of the Individual Income Tax Law, "welfare benefits" shall mean cost-of-living subsidies paid to individuals in accordance with relevant state regulations out of welfare reserves or labor union funds allocated by enterprises, institutions, state authorities or social organizations; and "relief payments" shall mean hardship subsidies paid to individuals by civil affairs departments of people’s governments at all levels.
Article 15 For the purpose of Item 8 of Article 4 of the Tax Law, "income of diplomatic representatives, consular officials and other employees of foreign embassies and consulates in China, which is exempted from tax under relevant Chinese laws" shall mean income that is tax-exempt under the Regulations of the People's Republic of China concerning Diplomatic Privileges and Immunities or the Regulations of the People's Republic of China concerning Consular Privileges and Immunities.
Article 16 The range and period of individual income tax reductions mentioned in Article 5 of the Individual Income Tax Law shall be set by the people's government of each province, autonomous region or municipality directly under the Central Government.
Article 17 For the purpose of Item 2 of the first paragraph of Article 6 of the Individual Income Tax Law, "costs" and "expenses" shall mean all direct expenses and indirect expenses allocated as costs, as well as selling expenses, administrative expenses and financial expenses incurred in production or operation activities; and "losses" shall mean all non-operating expenses incurred by taxpayers in the course of production or operation activities.
Where taxpayers engaged in production or operation activities fail to provide complete or accurate tax information and it is not possible to calculate their taxable income accurately, their taxable income shall be subject to assessment by competent tax authorities.
Article 18 For the purpose of item 3 of the first paragraph of Article 6 of the Individual Income Tax Law, "total income amount of each tax year" shall mean the operating profits distributed to taxpayers and their income of a wage or salary nature under their contracted or leased operations contracts; and "deduction of necessary expenses" shall mean a monthly deduction of CNY3,500.
Article 19 For the purpose of Item 5 of the first paragraph of Article 6 of the Individual Income Tax Law, "the original value of the property" shall mean:
1.
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