Individual Income Tax Law of the People’s Republic of China
Passed by the Third Session of the Fifth National People's Congress on 10 September 1980
First revision pursuant to the Decision on Revision of the "Individual Income Tax Law of the People's Republic of China" on 31 October 1993 by the Fourth Session of the Standing Committee of the Eighth National People's Congress
Second revision pursuant to the Decision on Revision of the "Individual Income Tax Law of the People's Republic of China" on 30 August 1999 by the 11th Session of the Standing Committee of the Ninth National People's Congress
Third revision pursuant to the Decision on Revision of the "Individual Income Tax Law of the People's Republic of China" on 27 October 2005 by the 18th Session of the Standing Committee of the Tenth National People's Congress
Fourth revision pursuant to the Decision on Revision of the "Individual Income Tax Law of the People's Republic of China" on 29 June 2007 by the 28th Session of the Standing Committee of the Tenth National People's Congress
Fifth revision pursuant to the Decision on Revision of the "Individual Income Tax Law of the People's Republic of China" on 29 December 2007 by the 31st Session of the Standing Committee of the 10th National People's Congress
Sixth revision pursuant to the Decision on Revision of the "Individual Income Tax Law of the People's Republic of China" on 30 June 2011 by the 21st Session of the Standing Committee of the 11th National People's Congress
Seventh revision pursuant to the Decision on Revision of the "Individual Income Tax Law of the People's Republic of China" on 31 August 2018 by the Fifth Session of the Standing Committee of the 13th National People's Congress
Article 1 Individuals who have a domicile in China, or individuals who do not have a domicile in China but have resided in China for 183 days or more cumulatively within a tax year, shall be deemed as resident individuals. Income derived by resident individuals from China and overseas shall be subject to individual income tax pursuant to the provisions of this Law.
Individuals who do not have a domicile in China and have not resided in China, or individuals who do not have a domicile in China but have resided in China for less than 183 days cumulatively within a tax year, shall be deemed as non-resident individuals. Income derived by non-resident individuals from China shall be subject to individual income tax pursuant to the provisions of this Law.
Tax year shall start from 1 January and end on 31 December of a calendar year.
Article 2 The following income of an individual shall be subject to individual income tax:
(1) Income from wages and salaries;
(2) Income from remuneration for personal services;
(3) Income from author's remuneration;
(5) Income from business operation;
(6) Income from interest, dividends and bonuses;
(7) Income from lease of property;
(8) Income from transfer of property; and
Resident individuals deriving income mentioned in item (1) to item (4) of the preceding paragraph (hereinafter referred to as the "consolidated income") shall consolidate and compute individual income tax based on the tax year; non-resident individuals deriving income mentioned in item (1) to item (4) of the preceding paragraph shall compute individual income tax on a monthly basis or based on each income item under each category. Taxpayers deriving income mentioned in item (5) to item (9) of the preceding paragraph shall compute individual income tax separately pursuant to the provisions of this Law.
Article 3 Individual income tax rates:
(1) Consolidated income shall be taxed at progressive rates ranging from 3% to 45% (see tax rate schedule attached);
(2) Income from business operation shall be taxed at progressive rates ranging from 5% to 35% (see tax rate schedule attached);
(3) Income from royalties, income from interest, dividends and bonuses, income from lease of property, income from transfer of property and contingent income shall be subject to proportional tax rate, the tax rate shall be 20%.
Article 4 The following categories of individual income shall be exempted from individual income tax:
(1) Awards for achievements in science, education, technology, culture, public health, sports, environmental protection, etc granted by the provincial People's Governments, Ministries and Commissions under the State Council, units of the Chinese People's Liberation Army at or above the level of corps, as well as foreign organisations and international organisations;
(2) Interest income on treasury bonds and other financial debentures issued by the State;
(3) Subsidies and allowances issued on a unified basis in accordance with the provisions of the State;
(4) Welfare benefits, compensation and relief funds;
(6) Military severance pay, demobilisation pay and decommissioning pay received by members of the armed forces;
(7) Settling-in allowance, severance pay, basic pension or retirement pay, retirement allowances and subsidies given to public servants and workers on a unified basis in accordance with the provisions of the State;
(8) Income derived by diplomatic representatives, consular officers and other personnel of embassies and consulates in China, which are exempted from tax in accordance with the provisions of the relevant laws of China;
(9) Tax-exempt income stipulated in international conventions and executed agreements to which the Chinese Government is a party; and
(10) Other tax-exempt income stipulated by the State Council.
The tax-exemption provisions in Item (10) of the preceding paragraph shall be filed by the State Council with the Standing Committee of National People's Congress for record.
Article 5 Individual income tax may be reduced in any of the following circumstances; the specific range and duration shall be stipulated by the People's Government of the province, autonomous region and centrally-administered municipality, and filed with the Standing Committee of People's Congress at counterpart level:
(1) Income derived by disabled persons, unsupported aged persons or dependents of a martyr; or
(2) Suffering heavy losses due to a severe natural disaster.
The State Council may stipulate other circumstances for tax reduction, and file record with the Standing Committee of National People's Congress.
Article 6 Computation of taxable income amount:
(1) The taxable income amount of consolidated income of a resident individual shall be the balance after deduction of RMB60,000, as well as special deductions, special additional deductions and other deductions determined pursuant to the law, from the income amount of each tax year.
(2) The taxable income amount for income from wages and salaries of a non-resident individual shall be the balance after deduction of RMB5,000 from the monthly income; the taxable income amount for income from remuneration for personal services, income from author's remuneration, income from royalties and income from lease of property shall be the amount of each income item.
(3) The taxable income amount for income from business operation shall be the balance after deduction of the costs, expenses and losses from the total income amount in each tax year.
(4) The taxable income amount for income from lease of property shall be the balance after deduction of RM800 from each income item which is not more than RMB4,000, or the balance after deduction of 20% of expenses from each income item which is more than RMB4,000.
(5) The taxable income amount for income from transfer of property shall be the balance after deduction of the original value of the property and reasonable expenses, from the income amount for transfer of property.
(6) The taxable income amount for income from interest, dividends, bonuses, and contingent income shall be the amount of each income item.
The income amount of remuneration for personal services, author's remuneration and royalties shall be the balance after deduction of 20% of expenses from the income. The income amount of author's remuneration shall be reduced and computed at 70%.
Where an individual donates his/her income to education, poverty alleviation and other public welfare and charitable undertakings, the portion of donation which does not exceed 30% of his/her declared taxable income amount may be deducted from his/her taxable income amount; where the State Council stipulates that the full amount of donation to public welfare and charitable undertakings are tax deductible, such provisions shall prevail.
Special deductions stipulated in item (1) of the first paragraph of this Article shall include basic pension insurance, basic medical insurance, unemployment insurance and other social security premiums, as well as housing provident fund etc, contributed by resident individuals in accordance with the scope and standards stipulated by the State; special additional deductions shall include expenses towards children education, continuing education, major illness medical treatment, housing loan interest or housing rent, support for elderly etc, the detailed scope, standards and implementation steps of which shall be determined by the State Council, and filed with the Standing Committee of National People's Congress for record.
Article 7 For income of a resident individual derived from outside China, the individual income tax paid overseas may be deducted from his/her taxable amount; however, the deductible amount shall not exceed the tax payable amount computed pursuant to the provisions of this Law for the said taxpayer's overseas income.
Article 8 Under any of the following circumstances, the tax authorities shall have the right to make tax adjustment based on a reasonable method:
(1) The business dealings between an individual and his/her related parties do not comply with the arm's length principle, and the tax payable amount of the individual or his/her related parties is thereby reduced, when there is no proper reason;
(2) An enterprise controlled by a resident individual, or an enterprise established in a country (region) with significantly lower tax burden and jointly controlled by a resident individual and a resident enterprise, does not distribute or reduces distribution of profits which is attributable to the resident individual, when there are no reasonable business needs; or
(3) An individual carries out other arrangements without reasonable business purpose and obtains improper tax gains.
Where there is a need to levy additional tax after making tax adjustments pursuant to the provisions of the preceding paragraph, the tax authorities shall levy additional tax and collect interest thereon pursuant to the law.
Article 9 Taxpayers for individual income tax shall be the income earners, and withholding agents shall be the organisations or individuals which pay income.
Where a taxpayer has a Chinese citizen identity number, the Chinese citizen identity number shall be his/her taxpayer identity number; where a taxpayer does not have a Chinese citizen identity number, the tax authorities shall issue a taxpayer identity number. When a withholding agent withholds tax, the taxpayer shall provide his/her taxpayer identity number to the withholding agent.
Article 10 Under any of the following circumstances, the taxpayer shall make tax declaration pursuant to the law:
(1) the taxpayer obtains consolidated income and needs to process final settlement and payment;
(2) the taxpayer obtains taxable income but there is no withholding agent;
(3) the taxpayer obtains taxable income but the withholding agent does not withhold tax;
(4) the taxpayer obtains overseas income;
(5) the taxpayer has migrated overseas and cancelled his/her household registration in China;
(6) a non-resident individual derives income from wages and salaries from two or more sources in China; or
(7) any other circumstances stipulated by the State Council.
Withholding agents shall declare and withhold full amount for all staff in accordance with the provisions of the State, and provide taxpayers with their individual income and tax withheld information.
Article 11 Resident individuals deriving consolidated income shall compute individual income tax on a yearly basis; where there is a withholding agent, the withholding agent shall withhold and prepay tax on a monthly basis or based on each income item; where there is a need for final settlement and payment, the taxpayer shall do so during the period from 1 March to 30 June of the following year after obtaining the income. The withholding and prepayment method shall be formulated by the tax department of the State Council.
Where a resident individual has provided information on special additional deduction to the withholding agent, the withholding agent shall make deduction pursuant to the provisions when withholding and prepaying tax on a monthly basis, and shall not refuse.
Tax payable on income from wages and salaries, income from remuneration for personal services, income from author's remuneration, and income from royalties, which are derived by a non-resident individual, shall be withheld and prepaid by the withholding agent, if any, on a monthly basis or based on each income item, and is not subject to final settlement and payment.
Article 12 Taxpayers deriving income from business operation shall compute individual income tax on a yearly basis, file tax returns with the tax authorities within 15 days from end of the month or quarter, and pay tax in advance; and process final settlement and payment before 31 March of the following year after obtaining the income.
Taxpayers deriving income from interest, dividends and bonuses, income from lease of property, income from transfer of property and contingent income shall compute individual income tax on a monthly basis or for each income item; where there is a withholding agent, the withholding agent shall withhold tax on a monthly basis or based on each income item.
Article 13 Where a taxpayer obtains taxable income but there is no withholding agent, he/she shall file tax returns with the tax authorities within the first 15 days of the following month after obtaining the income, and pay tax.
Where a taxpayer obtains taxable income but the withholding agent does not withhold tax, the taxpayer shall pay tax before 30 June of the following year after obtaining the income; where the taxpayer is notified by the tax authorities to pay tax by a certain deadline, the taxpayer shall pay tax within the stipulated period.
A resident individual who derives overseas income shall declare and pay tax during the period from 1 March to 30 June of the following year after obtaining the income.
A non-resident individual who derives income from wages and salaries from two or more sources in China shall declare and pay tax within the first 15 days of the following month after obtaining the income.
Where a taxpayer has migrated overseas and cancelled his/her household registration in China, he/she shall settle tax payment before cancellation of his/her household registration in China.
Article 14 Tax withheld by a withholding agent on a monthly basis or based on each income item shall be turned over to the Treasury within the first 15 days of the following month, and the declaration form for withholding of individual income tax shall be submitted to the tax authorities.
Where a taxpayer processes final settlement and payment, or a withholding agent processes final settlement and payment and refund for a taxpayer, the tax authorities shall, upon examination and approval of the application, process tax refund pursuant to the relevant provisions on Treasury administration.
Article 15 The public security authorities, the People's Bank of China, financial supervision and administration authorities etc shall assist the tax authorities in confirming taxpayer's identity and financial account information. The education authorities, health authorities, medical insurance agencies, civil affairs authorities, human resources and social security authorities, housing and urban-rural development authorities, public securities authorities, the People's Bank of China, financial supervision and administration authorities etc shall provide the tax authorities with the information on special additional deductions for taxpayers, such as children education, continuing education, major illness medical treatment, housing loan interest or housing rent, support for elderly etc.
For transfer of real estate by individuals, the tax authorities shall verify the payable individual income tax based on the relevant information such as real estate registration; when the registration authorities process transfer registration, it shall inspect the tax payment certificate for individual income tax relating to transfer of the said real estate. When an individual completes change registration for transfer of equities, the market entity registration authorities shall inspect the tax payment certificate for individual income tax relating to transfer of the said equities.
The relevant authorities shall include information on compliance of this Law by taxpayers and withholding agents in the creditworthiness information system, and implement incentivisation or punishment jointly.
Article 16 All categories of income shall be computed in Renminbi. Income in a foreign currency shall be converted to Renminbi based on Renminbi central parity against the foreign currency, and be subject to tax payment.
Article 17 A handling fee of 2% of the amount of tax withheld shall be paid to withholding agents.
Article 18 The levying, reduction and cessation of levying of individual income tax on income from interest of savings deposit and the detailed measures thereof shall be stipulated by the State Council, and filed with the Standing Committee of National People's Congress for record.
Article 19 The legal liability of taxpayers, withholding agents, tax authorities and their officers that violate the provisions of this Law shall be pursued in accordance with the Administrative Law of the People's Republic of China on the Levying and Collection of Taxes and the relevant laws and regulations.
Article 20 Administration of levying and collection of individual income tax shall be implemented in accordance with the provisions of this Law and the Administrative Law of the People's Republic of China on the Levying and Collection of Taxes.
Article 21 The State Council shall formulate the implementation regulations pursuant to this Law.
Article 22 This Law shall be implemented with effect from the date of promulgation.
Schedule 1 — Individual income tax rates (applicable for consolidated income)
|
Grade |
Annual taxable income amount |
Tax rate (%) |
|
1 |
RMB36,000 or less |
3 |
|
2 |
The part exceeding RMB36,000 and up to RMB144,000 |
10 |
|
3 |
The part exceeding RMB144,000 and up to RMB300,000 |
20 |
|
4 |
The part exceeding RMB300,000 and up to RMB420,000 |
25 |
|
5 |
The part exceeding RMB420,000 and up to RMB660,000 |
30 |
|
6 |
The part exceeding RMB660,000 and up to RMB960,000 |
35 |
|
7 |
The part exceeding RMB960,000 |
45 |
Schedule 2 — Individual income tax rates (applicable for income from business operation)
|
Grade |
Annual taxable income amount |
Tax rate (%) |
|
1 |
RMB30,000 or less |
5 |
|
2 |
The part exceeding RMB30,000 and up to RMB90,000 |
10 |
|
3 |
The part exceeding RMB90,000 and up to RMB300,000 |
20 |
|
4 |
The part exceeding RMB300,000 and up to RMB500,000 |
30 |
|
5 |
The part exceeding RMB500,000 |
35 |