The revised regulations for the implementation of the personal income tax law of the people's republic of china were published by the state council on 22 january 2019 and were implemented in parallel with the new personal income tax law。
On the same day, the state council published the temporary scheme for special supplementary credits to personal income taxes, which became effective on 1 january 2019。
The concern is how many taxes do you have to pay? How
What about taxes
Article 6, paragraph 1 (a), of the new personal income tax law provides that the combined income received by the individual resident is reduced by the amount of his or her income for each tax year by 60,000 yuan in fees and by the balance of special deductions, special surcharges and other deductions determined by law。
That is, the formula: taxable income = monthly income = $5,000 (start point) = special deduction (triple insurance contribution, etc.) = special deduction = other deductions determined by law。
How much money can be saved by “specific surcharges”
In the above-mentioned formula, a specific deduction is critical。
The state council has recently issued the temporary measures for special supplements to personal income taxes, which specify six criteria for special deductions, such as children's education, continuing education, medical care, interest on housing loans or rental of housing, maintenance of elderly persons, etc。
So, how much does the special-purpose deduction save you
For example, a married person, li (an only child), who works in beijing, earns $10,000 a month, a “triple-risk-one dollar” special deduction of $2,000, rents $4,000 a month, has a child attending primary school and parents are over 60 years old。
If the starting point is $3,500, there is no specific deduction and a monthly tax of $345
Where the starting point is $5,000, there are no special deductions and a monthly tax of 10000-500-2000 x 3 per cent = $90。
With a specific deduction, li is entitled to at least $1,500 in rent, $1,000 in child education and $2,000 in old-age maintenance, so the tax = 10000-500-2000-10000-2000 = 3% = zero。
In other words, although li does not benefit from the three exclusive surcharges of continuing education, major illness, interest on initial home loans, after the deduction of the child's education, rental of housing, special surcharge for old-age maintenance, the monthly salary may be zero, and even if the salary rises to $11,500, it may be zero。
What is “other legally determined deductions”
Pre-taxable deduction for personal annuities, purchase of business health insurance, etc
What are the “other legally determined deductions” included in the above-mentioned tax formula? How much can i save you
The regulations issued this time by the state council clearly state that other deductions include the payment by individuals of enterprise annuities, occupational annuities that comply with state regulations, expenditures on the purchase by individuals of commercial health insurance that meet state requirements, tax deferred commercial pension insurance and other items that the state council provides for deductions。
How many would benefit from this regulation
In the case of the corporate annuity, 2,352,600 people will benefit。
According to data published by the ministry of human welfare on 17 december, at the end of the third quarter of 2018, the total amount of accumulated funds for enterprises nationwide was rmb 142,317 million; the total number of employees nationwide was 2,352,000。
In addition, the individual tax deferred commercial pension insurance pilot was officially launched on 1 may 2018 and may be deducted if you have purchased the individual tax deferred commercial pension insurance, the deduction being based on a low of 6 per cent and $12,000 of taxable income for the current year。
In accordance with the regulations, special deductions, special surcharges and other deductions determined by law are limited in the amount of taxable income of the individual resident for a tax year; if a tax year is not fully deducted, they are not carried forward for subsequent years。
Both groups will benefit
• individual business households may deduct necessary household subsistence expenses
The combined income and business income earned by resident individuals from inside and outside china shall be calculated in combination with the taxable amount, respectively. In order to support the promotion of self-employment, the ordinance provides for the deduction of the necessary expenses for the subsistence of the family by business owners, such as self-employed business owners, when calculating the proceeds of their business。
The regulations provide that, if an individual who acquires business income does not have a combined income, the amount of his/her taxable income for each tax year shall be calculated less the cost of 60,000 yuan, special deductions, special surcharges and other deductions determined by law. Earmarked surcharges are deducted from the processing of remittances。
The data disclosed by the national directorate of market supervision show that at the end of october 2018 there were 7,1372,000 individual businesses nationwide。
In other words, 71,372,000 self-employed businesses will also benefit from the new personal income tax act's six additional special deductions for “children's education, continuing education, medical care, interest on housing loans or rental of housing, old-age maintenance, etc., which will reduce the burden。
How can individual traders make special deductions? The regulations make it clear that the taxable income or taxable amount is approved by the competent tax authorities if the activity involves production and operation, does not provide complete and accurate tax information and cannot be correctly calculated。
• increased tax incentives for persons abroad who meet the individual criteria of the resident
An individual who is subject to personal income tax under the personal income tax act is an individual who has a residence in china or who has no residence and who has resided in china for a tax year for a cumulative period of 183 days。
Previously, china implemented a five-year exemption policy for persons abroad who met the individual criteria for residence:
In the case of individuals who have no residence in china and who have resided in the country for a cumulative period of 183 days for less than five consecutive years, or who have completed five years with a single departure exceeding 30 days, the income derived from outside china may be paid only in respect of part of the income tax paid by enterprises and other economic organizations in china or by individual residents。
The regulation increases tax incentives for persons abroad who meet the individual criteria of the resident to better attract talent abroad。
The regulations make it clear that an individual who has no place of residence in china who has resided in china for a period of less than six consecutive years for a cumulative period of 183 days in china and who has filed a complaint with the competent tax authorities and whose income is derived outside china and is paid by an offshore unit or individual shall be exempt from personal income tax; if he or she has departed for more than 30 days in one of any of the years in which he or she has resided in china for a cumulative period of 183 days, his or her annual period of continuous residence in china shall be calculated again。
At the same time, individuals who have no place of residence in china and who have resided in china for a period not exceeding 90 days in a tax year are exempt from personal income tax if they derive their income from income in china and are paid by an employer outside china and are not covered by the employer's institutions and premises in china。
