Notice of the State Council on Promulgation of the Provisional Measures on Special Additional Deductions for Individual Income Tax
Guo Fa [2018] No. 41
To: People's Governments of all
provinces, autonomous regions and centrally-administered
municipalities; all ministries, commissions and direct-reporting agencies
of the State Council
The Provisional Measures on Special Additional
Deductions for Individual Income Tax is hereby promulgated for your
implementation.
13 December 2018
Provisional Measures on Special
Additional Deductions for Individual Income Tax
Article 1
These Measures are formulated pursuant to the
provisions of the Individual Income Tax Law of the People's Republic of China
(hereinafter referred to as the "IIT Law").
Article 2
Special additional deductions for individual
income tax referred to in these Measures shall mean six items of special
additional deductions stipulated in the IIT Law, namely children's education,
continuing education, medical treatment for major illness, housing loan
interest or housing rent, support for the elderly.
Article 3
Special additional deductions for individual
income tax shall adhere to the principles of fairness, reasonableness,
conducive to people's livelihood, easy and convenient implementation.
Article 4
The scope and standards for special
additional deductions shall be adjusted at appropriate time in accordance with
changes in livelihood expenditure such as education, medical, housing, pension
etc.
Chapter 2 Children's education
Article 5
The relevant expenses for taxpayer's children
receiving full-time academic education shall be deducted at a fixed amount in
accordance with the standard of RMB1,000 per month for each child.
Academic education shall include compulsory
education (primary school and secondary school education), high school
education (normal high school, intermediate vocational and technician
education), tertiary education (junior college, bachelor's degree, master's
degree and doctoral education).
For children from the
age of three to pre-school age, the provisions of the first paragraph of this
Article shall apply.
Article 6
Either parent may claim 100% deduction in
accordance with the standards, or both parents may claim 50% deduction
respectively in accordance with the standards, and the chosen deduction method
shall not be changed within a tax year.
Article 7
Where a taxpayer's child is receiving
education overseas, the taxpayer shall retain the relevant education proof
materials such as the notice of enrolment from the overseas school, overseas
education visa etc.
Chapter 3 Continuing Education
Article 8
The expenses for a taxpayer receiving
academic (degree) continuing education in China shall be deducted at a fixed
amount in accordance with the standard of RMB400 per month during the academic
(degree) education period. The deduction period for the same academic (degree)
continuing education shall not exceed 48 months. The expenses for a taxpayer
receiving technician vocation qualification continuing education or
professional technician vocational qualification continuing education shall be
deducted at a fixed amount of RMB3,600 in the year in which the relevant
certificate is issued.
Article 9
Where a taxpayer receiving academic (degree)
continuing education for university degree and below qualifies for deduction
pursuant to the provisions of these Measures, the deduction may be claimed by
his/her parents or the taxpayer.
Article 10
Taxpayers receiving technician vocational
qualification continuing education or professional technician vocational
qualification continuing education shall retain the relevant certificates etc
for future inspection.
Chapter 4 Medical Treatment for Major Illness
Article 11
Within a tax year, where the medical expenses
incurred and borne by a taxpayer in relation to the basic medical insurance,
after the deduction of medical insurance reimbursement (referring to the
portion borne by the insured within the scope of medical insurance directory),
cumulatively exceed RMB15,000, the taxpayer shall deduct the excess truthfully
within the RMB80,000 limit at the time when making annual computation and
settlement.
Article 12
A taxpayer or his/her spouse may claim
deduction for the medical expenses incurred by the taxpayer; only one
parent may claim deduction for the medical expenses incurred by his/her
underaged child(ren).
The deduction amount for the medical
expenses incurred by a taxpayer, his/her spouse and underaged child(ren) shall
be computed separately pursuant the provisions of Article 1 of these Measures.
Article 13
Taxpayers shall retain materials such as
original copy (or photocopy) of the relevant invoices for medical services and
medical insurance reimbursement etc for future inspection. The medical
insurance administration shall provide enquiry services for patients to access
their personal annual medical expenses information recorded in the medical
insurance information system.
Chapter 5 Housing Loan Interest
Article 14
Where a taxpayer or his/her spouse singly or
jointly use(s) a commercial bank loan or housing provident fund personal
housing loan to purchase a house in China for himself/herself or his/her
spouse, the first-time housing loan interest expenses shall be deducted in
accordance with the standard of RMB1,000 per month in the year(s) when the loan
interest actually occurs, and the deduction period shall not exceed 240 months.
A taxpayer is entitled to interest deduction of first-time housing loan only
once.
First-time housing loan referred to in
these Measures shall mean the housing loan for which the first-time housing
loan interest rate is applicable for purchasing of housing.
Article 15
The husband and the wife may agree and choose
one of them to claim deduction; the detailed deduction method shall not be
changed within a tax year.
For the first-time housing loan incurred by
the husband and the wife for houses purchased respectively before the marriage,
the couple may, after marriage, choose one of the houses to claim 100%
deduction of the loan interest expenses in accordance with the deduction
standard, or may claim 50% deduction for the house purchased by himself/herself
respectively; the detailed deduction method shall not be changed within a
tax year.
Article 16
Taxpayers shall retain their housing loan
contract and proof of loan repayment expenditure for future inspection.
Article 17
The housing rent expenses incurred by a
taxpayer who does not own a house in his/her main workplace city may be
deducted at a fixed amount in accordance with the following standards:
(1) the deduction
standard shall be RMB1,500 per month for centrally-administered municipalities,
provincial capital (capital) cities and municipalities with unilateral
planning, as well as other cities determined by the State Council;
(2) except for cities
listed in item (1), the deduction standard shall be RMB1,100 per month for
city-governed districts with a household registered population exceeding 1
million; the deduction standard shall be RMB800 per month for
city-governed districts with a household registered population not exceeding 1
million.
Where a taxpayer's spouse owns a house in
the taxpayer's main workplace city, the taxpayer shall be deemed to own a house
in his/her main workplace city.
The household
registered population of a city-governed district shall be based on the data
published by the National Bureau of Statistics.
Article 18
Main workplace city referred to in these
Measures shall mean the entire administrative region of the
centrally-administered municipality, municipality with unilateral planning,
sub-provincial city, or prefecture-level city (region, state, league) at which
the taxpayer is employed; where a taxpayer does not have an employer,
his/her main workplace city shall be the city where the tax authorities process
computation and settlement of the taxpayer's consolidated income.
Where the husband and the wife work in the
same main workplace city, only one party can claim deduction for housing rent
expenditure.
Article 19
Housing rent expenditure shall be deducted by
the lessee who enters in to the house rental contract.
Article 20
A taxpayer and his/her spouse shall not claim
special additional deductions concurrently for housing loan interest and
housing rent within a tax year.
Article 21
Taxpayers shall retain the relevant materials
such as housing rental contract, agreement etc for future inspection.
Article 22
The support expenditure incurred by a
taxpayer supporting one or more dependents shall be deducted at a fixed amount
in accordance with the following standards:
(1) where the taxpayer
is the only child, deduction shall be deducted at a fixed amount in accordance
with the standard of RMB2,000 per month;
(2) where the taxpayer
is not the only child, he/she and the sibling(s) shall share the deduction
limit of RMB2,000 per month, however the limit shared by each person shall not
exceed RMB1,000 per month. The taxpayer and the siblings may claim equal shares
of deduction or agree on the sharing ratio, or the dependent(s) may designate
the sharing ratio. A written sharing agreement shall be concluded for agreed or
designated sharing; designated sharing shall take precedence over agreed
sharing. The detailed sharing method and amount shall not be changed within a
tax year.
Article 23
Dependents referred to in these Measures
shall mean parents aged 60 and above, as well as paternal grandparents and
maternal grandparents aged 60 and above whose child(ren) has/have passed away.
Article 24
When a taxpayer requests for invoice, fiscal
receipt or proof of expenditure from the fee collecting organisation, the fee
collecting organisation shall not refuse to provide.
Article 25
A taxpayer claiming special additional
deductions for the first time shall submit the information relating to the
special additional deductions to the withholding agent or the tax authorities,
the withholding agent shall promptly submit the relevant information to the tax
authorities, and the taxpayer shall be responsible for the veracity, accuracy
and integrity of the information submitted.
Where there is any change in the special
additional deduction information, the taxpayer shall promptly provide the
relevant information to the withholding agent or the tax authorities.
The relevant
information for special additional deduction referred to in the preceding
paragraph shall include the personal identity information of the taxpayer,
his/her spouse, child(ren), dependent(s) etc, as well as other information
relating to special additional deductions stipulated by the tax authority of
the State Council.
The relevant
materials stipulated in these Measures to be retained for future inspection
shall be retained for five years.
Article 26
The relevant authorities and organisation(s)
shall be liable and obligated to provide the following information relating to
special additional deductions to the tax authorities or assist the tax
authorities in verifying such information:
(1) basic information
of household registration population, household member relationship
information, passport information, overseas residing personnel information,
deceased information etc from the public security bureau;
(2) birth certificate
information issued by the health authorities, and only child information;
(3) marital status
information issued by the civil affairs authorities, foreign affairs
authorities, people's court etc;
(4) student status
information issued by the education authorities (including academic
qualification, continuing education student status, and examinee status
information), and qualification information of overseas educational
institutions filed with the relevant authorities;
(5) technician student
status information, technician vocational qualification continuing education
information, and professional technician vocational qualification continuing
education information issued by the human resources and social security
authorities;
(6) housing (including
public housing) rental information issued by the housing and urban-rural
development authorities, and housing provident fund loan repayment expenditure
information issued by the housing provident fund management agencies;
(7) immovable property
registration information issued by the natural resources administrative
authorities;
(8) commercial bank
housing loan repayment expenditure information issued by the People's Bank of
China and the financial regulatory authorities;
(9) information on
medical expenses borne by the individual, which are recorded in the medical
insurance information system of the medical insurance administrative authorities; and
(10) any other
tax-related information to be provided as determined by the tax department of
the State Council.
The formats, standards and sharing methods
of the aforesaid data and information shall be determined by the tax authority
of the State Council and the tax bureaux of the provinces, autonomous regions,
centrally-administered municipalities and municipalities with independent
planning in consultation with the relevant authorities.
Where the relevant
authorities and organisations possess tax-related information on special
additional deductions but do not provide such information to the tax
authorities as required, the key person-in-charge and the relevant personnel of
the relevant authorities and organisations possessing such tax-related information
shall bear the corresponding liability.
Article 27
Where the withholding agent discovers that
the information provided by the taxpayer does not match the facts, the
withholding agent may request the taxpayer to amend the information. Where the
taxpayer refuses to amend, the withholding agent shall report to the tax
authorities, and the tax authorities shall promptly process.
Article 28
When the tax authorities verify information
on special additional deductions, the relevant organisations and individuals
such as the public security bureau, resident committee or village committee at
the location of the taxpayer's employer, the taxpayer's habitual residence and
the taxpayer's household registration shall assist in the verification.
Chapter 9 Supplementary Provisions
Article 29
Parents referred to in these Measures shall
mean biological parents, step-parents and adoptive parents. Children referred
to in these Measures shall mean children born in wedlock, children born out of
wedlock, stepchildren and adopted children. For guardians of underaged persons
who are non-parents, the provisions of these Measures shall apply as reference.
Article 30
Special additional deductions for individual
income tax which are not used up in a tax year shall not be carried forward to
subsequent years for deduction.
Article 31
The detailed operation measures for special
additional deductions for individual income tax shall be separately formulated
by the tax authority of the State Council.
Article 32
These Measures shall be implemented with
effect from 1 January 2019.