Individual income tax is a general term for the legal norms that regulate the social relations between taxing authorities and natural persons (residents and non-residents) in the process of collection and administration of individual income tax.
The taxpayers of individual income tax include both resident and non-resident taxpayers. Resident taxpayers are fully liable to pay tax and must pay individual income tax on all their income derived from within and outside China, while non-resident taxpayers pay individual income tax only on their income derived from within China.
Individual income tax is a kind of income tax levied by the state on the income of its own citizens, individuals residing in its territory, and the income of individuals outside its territory derived from its own country. In some countries, personal income tax is the main tax, accounting for a large share of fiscal revenue and having a large impact on the economy.
On September 1, 2011, the personal tax exemption was raised to 3,500 yuan in mainland China.
Contents of taxation
Income from wages and salaries
Income from wages and salaries refers to wages, salaries, bonuses, year-end raises, labor bonuses, allowances, subsidies, and other incomes related to one's position or employment, which an individual receives as a result of holding a position or being employed. That is to say, the income obtained by individuals, as long as it is related to the post, employment, regardless of the unit of its capital expenditure channels or in the form of cash, in-kind, securities and other forms of payment, are wages, salaries, income items of the object of taxation.
Individual industrial and commercial households production, business income
Individual industrial and commercial households production, business income includes four aspects:
(a) by the administration for industry and commerce approved to open and receive a business license for urban and rural individual industrial and commercial households, engaged in the industry, handicrafts, construction, transportation, commerce, catering, services, repairs, and other sectors of the production, business income. Income obtained.
(2) Individuals approved by the relevant government departments, obtaining a business license, engaged in school, medical, consulting and other paid service activities to obtain income.
(3) Income derived by other individuals from engaging in individual industrial and commercial production and operation, as well as income derived by individuals from engaging in production and operation activities on a temporary basis.
(4) All taxable incomes related to production and operation obtained by the above individual industrial and commercial households and individuals.
Income from Contracting and Leasing to Enterprises and Institutions
Income from Contracting and Leasing to Enterprises and Institutions refers to the income obtained by individuals from Contracting and Leasing, as well as from Subcontracting and Subleasing, including income of the nature of wages and salaries obtained by individuals on a monthly or per-periodic basis.
Income from remuneration for services
Income from remuneration for services refers to the income derived from design, decoration, installation, drafting, laboratory, testing, medical, legal, accounting, consulting, lecturing, journalism, broadcasting, translating, reviewing, painting, calligraphy, sculpture, film, audio, video recording, performance, show, advertisement, exhibition, technical service, referral service, economic service, agency service, and other services. Income obtained.
Manuscript Income
Manuscript income refers to the income received by an individual from the publication of his or her work in the form of a book or newspaper. The term "work" here refers to works that can be published in book or newspaper form, including Chinese and foreign words, pictures, music scores, etc. The term "personal work" includes one's own writings, translations, and so on. Individuals who receive remuneration for posthumous works shall be taxed according to the item of income from manuscripts.
Royalty Income
Royalty income refers to the income derived from the provision of the right to use patent rights, copyrights, trademarks, non-patented technologies and other franchises. Income derived from the provision of the right to use copyrights does not include income from royalties. Income derived by an author from the public auction (bidding) of the original or a copy of the manuscript of his/her written work shall be taxed under the item of royalty income.
Income from Interest, Dividends, and Bonuses
Income from interest, dividends, and bonuses refers to the interest, dividends, and bonuses obtained by an individual who owns a debt or an equity interest. Interest refers to interest on one's deposits (the state announced the abolition of interest tax from the day after October 8, 2008), interest on goods, and interest on the purchase of various bonds. Dividends, also known as stock dividends, are the investment benefits that stockholders regularly receive from a joint-stock company based on their shares in accordance with the articles of incorporation of the joint-stock company. Dividends, also known as corporate (enterprise) dividends, are profits in excess of the dividend portion of a joint-stock company or enterprise that are distributed on a share-by-share basis in accordance with the profits to be distributed. Payment of dividends and bonuses in the form of shares by a joint-stock company to individual shareholders, i.e., distribution of bonus shares, shall be taxed as income in the amount of the face value of the shares distributed.
Property Leasing Income
Property leasing income refers to the income from leasing of buildings, land use rights, machinery, equipment, vehicles and other property. Property includes movable and immovable property.
Income from property transfer
Income from property transfer refers to the income derived from the transfer of securities, equity, buildings, land use rights, machinery, equipment, vehicles and vessels, and other property to other people or units, including the transfer of immovable and movable property and the income derived. There is no tax on the income derived from individual stock trading.
Incidental Income
Incidental income refers to the income obtained by an individual on a non-recurring basis, which belongs to various kinds of opportunistic income, including winning prizes, jackpots and lotteries, as well as other incidental income (including prizes, in-kind goods and marketable securities). Individuals purchasing social welfare prize fund-raising raffle tickets and China Sports Lottery tickets are exempted from individual income tax if the income from one winning does not exceed RMB 10,000, and if it exceeds RMB 10,000, it shall be taxed in full under the item of incidental income (the tax rate as of April 21, 2011 is 20%).
Other Income
In addition to the above 10 taxable items, other income shall be determined for taxation by the finance department of the State Council. The financial departments of the State Council refer to the Ministry of Finance and the State Administration of Taxation. As of April 30, 1997, the Ministry of Finance and the State Administration of Taxation have determined the other items of income to be taxed:
(1) Individuals who have obtained "Cai Guanshen Honorary Foundation for Academicians of the Chinese Academy of Sciences" issued by the Honorary Bonus for Academicians of the Chinese Academy of Sciences.
(2) Individuals to obtain by the banking sector in excess of the national interest rate and value-added subsidy rate paid by the deposit bonus.
(3) Individuals who have obtained gratuitous sums of preferential income as a result of the payment of relevant insurance costs by the employing organization.
(iv) Interest (or similar income paid in other names) to insurance companies on the insured amount, paid at the bank's savings deposit rate for the same period of time to life insurance households that are not insured during the policy period.
(v) Rebate income or transaction fee rebate income obtained by individual stockholders from the payment of a portion of the transaction fee obtained by a securities company that solicits large stockholders to open accounts and trade in the Company to large stockholders.
(6) Individuals obtaining part of the units and departments
departments in the year-end summaries, various celebrations, business transactions and other activities for the other units and departments of the relevant personnel to distribute cash, in kind or marketable securities.
(vii) Resignation risk money.
(viii) Individuals are paid for providing guarantees for units or others.
If it is difficult to define which item of taxable income an individual receives, the competent tax authority shall examine and determine.
Reduction and Exemption Items
According to the provisions of the Individual Income Tax Law of the People's Republic of China, the Regulations for the Implementation of the Individual Income Tax Law of the People's Republic of China, and the relevant documents and regulations, the tax reduction and exemption policies for individual income tax mainly include:
(1) Provincial-level people's governments, ministries and commissions of the State Council, and units of the Chinese People's Liberation Army above the military level, as well as foreign organizations, International organizations awarded prizes in science, education, technology, culture, health, sports, environmental protection, etc., are exempted from individual income tax.
(2) The people's governments of townships and townships or above (including townships and townships), or foundations or similar organizations approved by the competent departments of the people's governments of counties or above (including counties), which have institutions and by-laws, shall be exempted from levying individual income tax on prizes or awards awarded to those who have demonstrated bravery and courage, subject to the approval of the competent tax authorities.
(3) Interest on bonds issued by the Ministry of Finance and financial bonds approved by the State Council shall be exempted from individual income tax.
(4) Article 5 of the State Council's Implementing Measures for Individual Income Tax on Interest on Savings Deposits states, "Individuals are exempted from individual income tax on the interest income from education savings, as well as on the interest income from other special savings deposits or deposits in special funds for savings as determined by the financial departments."
Cai Shui Zi (1999) No. 267 further stipulates that interest income derived from the deposit of housing provident fund, medical insurance fund, basic pension insurance fund, and unemployment insurance fund into individual bank accounts in accordance with the ratio prescribed by the national or provincial local governments is exempt from individual income tax.
Guo Shifa (1999) No. 180 also further stipulates that the interest earned on the deposits in the special account for education deposits opened with the Industrial and Commercial Bank of China and enjoying preferential interest rates is exempted from individual income tax.
(5) Special government allowances (meaning a special allowance issued by the state to those who have made outstanding contributions to the development of social undertakings, not referring to other subsidies and allowances approved by the State Council) and tax-exempted subsidies and allowances (at present, they are limited to the allowances for academicians of the Chinese Academy of Sciences and the Chinese Academy of Engineering, and the allowances for senior academicians) issued in accordance with the regulations of the State Council are exempted from individual income tax. Individual Income Tax.
(6) Welfare expenses, i.e., due to certain specific events or reasons that cause certain difficulties in the normal life of the employees or their families, the enterprises, institutions, state organs and social organizations shall pay to the employees the temporary hardship allowance from the welfare expenses or trade union funds that they have set aside in accordance with the relevant provisions of the State, and shall be exempted from individual income tax. The following income does not belong to the scope of tax-exempt welfare payments, should be included in wages and salaries for personal income tax:
1) from the welfare fees or union funds beyond the proportion or base set aside by the state to pay to the individual subsidies, grants;
2) from the welfare fees and trade union funds paid to the unit of employees of the subsidies, allowances for everyone's share;
3) the unit for the Individuals to buy cars, housing, computers and other expenditures that do not belong to the nature of the temporary hardship assistance.
(7) Pensions and relief payments (the living hardship allowance paid by the civil affairs department to an individual) are exempted from personal income tax.
(8) Insurance claims paid by insurance companies are exempted from personal income tax.
(9) Rehabilitation and demobilization fees for military personnel are exempted from individual income tax.
(10) Settlement fees, retirement fees (meaning the retirement fees received by an individual who meets the conditions for retirement stipulated in the Interim Measures of the State Council on the Retirement and Retirement of Workers and receives the retirement fees in accordance with the standards stipulated in the Measures), retirement fees, retirement pay and retirement living subsidies paid to cadres and workers in accordance with the unified regulations of the State are exempted from the individual income tax.
(11) Income exempted from tax under international conventions and agreements signed by our government is exempted from individual income tax.
(12) Housing provident fund, unemployment insurance premiums, medical insurance premiums and basic pension insurance premiums withdrawn by enterprises and individuals in accordance with the proportions stipulated by the state or local governments and actually paid to the designated financial institutions are not counted as the individual's current salary and wage income and are exempted from individual income tax. For housing fund, unemployment insurance premiums, medical insurance premiums and basic pension insurance premiums paid in excess of the proportion prescribed by the state or local government, the excess shall be included in the individual's current salary and wage income and be subject to individual income tax. Individuals are exempted from personal income tax when they receive the housing fund, unemployment insurance premiums, medical insurance premiums, and basic pension insurance premiums they originally deposited.
(13) In accordance with the provisions of Document No. 43 of the State Taxation Issuance (1999), laid-off workers engaged in community residential service industry shall be exempted from individual income tax for three years from the date of obtaining the tax registration certificate for those engaged in self-employment, and from the date of filing the certificate of layoff in the local competent tax authority for those engaged in independent labor service; however, in the first year, the exemption shall expire upon the expiration of the period, and the competent tax authorities above the county shall be responsible for the tax payment and the tax payment. However, after the expiration of the first year of tax exemption, the competent tax authorities above the county shall review the subject and scope of tax exemption year by year in accordance with the regulations, and those who meet the conditions may continue to be exempted from taxation for one to two years.
(14) In accordance with the provisions of Document No. 087 of the State Taxation Letter (1997), the income from seedling compensation paid by the land requisitioning unit to the land contractor in the process of land requisitioning shall be exempted from the individual income tax for the time being.
(15) According to the State Compensation Law, if the state organs and their staffs violate the lawful rights and interests of the citizens by exercising their powers in violation of the law and cause damages, the compensation obtained by the victims in accordance with the law shall not be taxed.
(16) in accordance with the provisions of the State Administration of Taxation (1994) No. 089, the following are not wages, salaries, subsidies, legal allowances, or income not belonging to the taxpayer's own wages, salaries, items of income, not taxable: ① one-child subsidy; ② implementation of the civil service payroll system is not included in the total amount of basic salaries, allowances, and family members of the subsidy for side dishes; ③ child care subsidies; ④ Travel allowance, missed meal allowance (refers to the provisions of the financial sector, individuals working in urban and suburban areas on official business, can not be in the work unit or return to the meal, really need to eat out, according to the actual number of meals missed, according to the prescribed standards of missed meal expenses).
(17) In accordance with the provisions of Document No. 061 of the Cai Shui Zi (1998), individuals are temporarily exempted from personal income tax on the income derived from the transfer of shares of listed companies.
(18) In accordance with the provisions of Document No. 127 of the State Administration of Taxation (1994) and Document No. 012 of the Cai Shui Zi (1998), individuals purchasing social welfare lottery tickets and sports lotteries are exempted from the individual income tax if the proceeds of a single win do not exceed 10,000 yuan, while those exceeding 10,000 yuan are subject to the individual income tax according to the regulations.
(19) In accordance with (94) Cai Shui Zi No. 020, the following income, temporarily exempt from personal income tax: ① individuals to report, investigate a variety of illegal and criminal behavior and get the prize money; ② individuals to handle the withholding of taxes, in accordance with the provisions of the withholding fee; ③ individual transfer of more than five years of self-use, and is the only family life of the house income; ④ to reach the age of retirement, but the retirement age. Senior experts who have reached the age of retirement and pension, but have extended their retirement and pension age appropriately due to the needs of their work (experts and scholars who are entitled to special government allowances issued by the state), their income from wages and salaries during the period of extension of retirement and pension shall be exempted from individual income tax as if they were retired and pensioned wages.
(20) In accordance with the provisions of Document No. 278 of the Cai Shui Zi (1999), in order to encourage individuals to buy houses in exchange, taxpayers who sell their own houses and intend to re-purchase their houses at market price within one year after the sale of their existing houses are exempted from all or part of the individual income tax payable on the sale of the existing houses, depending on the value of the re-purchased houses, by the following methods:
1) The individual income tax payable on the sale of the existing houses by the individual is exempted from all or part of the individual income tax, depending on the value of the re-purchased houses. The individual income tax payable on the sale of housing shall be paid to the competent local tax authorities in the form of a tax deposit before the transfer of property rights. When collecting the tax deposit, the tax authorities shall officially issue the "Chinese People's **** and State Tax Deposit Receipt" to the taxpayers and include it in the special account for storage.
②Individuals selling their current homes within 1 year after the re-purchase, according to the size of the purchase amount of tax deposit refunded accordingly. Purchase amount greater than or equal to the original housing sales (the original housing for the purchased public housing, the original housing sales should be deducted in accordance with the provisions of the financial or the original property rights of the unit to pay the proceeds, the same below), all the refund of tax deposits; purchase amount is less than the original housing sales, in accordance with the amount of the original housing sales of the original housing amount of tax deposits, the balance of the individual income tax into the state treasury.
3) If an individual does not repurchase a house within one year after selling his current house, all the tax deposit paid shall be paid to the state treasury as individual income tax.
4) When applying for the refund of the tax deposit, an individual shall provide the competent tax authorities with a legal and valid contract for the sale and purchase of the house and other supporting materials required by the competent tax authorities, and the tax deposit can be refunded only after the competent tax authorities have examined and confirmed the application.
5. Individuals who have sold or purchased houses across administrative regions and are eligible for the refund of tax deposit shall apply for the refund of tax deposit to the competent tax authorities in the place where the tax deposit was paid.
(21) in accordance with the provisions of the State Taxation Development (1999) No. 125, scientific research institutions (refers to the natural science research institutions set up in accordance with the provisions of the Office of the Chinese People's Political Consultative Conference (1997) No. 326 document for the approval of the institutions), schools of higher education (refers to the full-time ordinary schools of higher education, including universities, specialized schools and colleges of higher education) transformation of the scientific and technological achievements of the work of the form of equity in the form of shares or percentage of capital contribution Rewards given to individual scientific and technological personnel (who must be regular employees of scientific research institutions and schools of higher education) shall not be subject to individual income tax for the time being after examination and approval by the competent tax authorities. The rewarding unit or the awardee shall provide the competent tax authorities with the Certificate of Recognition of High-tech Achievements of the Contributor's Unit issued by the relevant departments in accordance with the Provisions on Several Issues Concerning the Contribution of High-tech Achievements into Shares [National Science and Technology Development and Government (1997) No. 326] and the Measures for Implementing the Provisions on Several Issues Concerning the Contribution of High-tech Achievements into Shares (National Science and Technology Development and Government (1998) No. 171), The business registration procedures handled by the administration for industry and commerce and the assessment report and confirmation of the value of the technical achievements of the assessment organization registered by the administration for industry and commerce. Those who do not provide the above information shall not be entitled to the preferential policy of temporary suspension of personal income tax. When the awardee receives dividends according to the proportion of shares or capital contribution, his/her income shall be subject to individual income tax under the taxable item of "Interest, Dividend and Bonus Income"; when the awardee transfers the proportion of shares or capital contribution, his/her income shall be subject to individual income tax under the taxable item of "Income from Transfer of Property", and the original value of the property shall be subject to individual income tax. The winner's transfer of equity and percentage of capital contribution shall be subject to individual income tax under the taxable item of "Income from Transfer of Property" and the original value of the property shall be zero.
(22) in accordance with the "Chinese People's *** and the State Individual Income Tax Law" and "Chinese People's *** and the State Individual Income Tax Law Implementation Regulations", the following items can be approved to reduce the individual income tax, the rate and period of reduction of people's governments of provinces, autonomous regions and municipalities directly under the Central Government to decide:
① disability, widows and orphans and martyrs of the proceeds of the
② as a result of natural disasters caused major losses;
③ other approved by the financial department of the State Council to reduce or waive. State Taxation Letter (1999) No. 329 document further clarifies that the provincial people's government can reduce the individual income tax approved by the disabled, widows and orphans and martyrs income is limited to labor income, the specific items of income: wages, salaries; individual business income from production and operation; enterprises and institutions of contracting, leasing and management income; remuneration for services; remuneration; royalties income; royalty income. Other income is not tax deductible. Other incomes are not subject to individual income tax reduction.
(23) The Individual Income Tax Law of the People's Republic of China (PRC) stipulates that income from manuscripts can be reduced by 30% of the taxable amount.
(24) Whether or not to levy individual income tax on interest or dividend or bonus income obtained by individuals from grassroots supply and marketing cooperatives and rural credit unions is to be determined by the tax bureaus of the provinces, autonomous regions and municipalities directly under the central government for the government's determination, and for the record of the Ministry of Finance and the State Administration of Taxation.
(25) in accordance with (80) Cai Shui Wai Word No. 196, the following foreign exchange income remitted from overseas exempt from personal income tax: ① overseas Chinese remittances from overseas into China to support their families; ② inheritance of foreign inheritance from overseas foreign exchange; ③ retrieval of foreign exchange remittances unfrozen in the U.S. funds.
(26) in accordance with the "Chinese People's *** and State Individual Income Tax Law", "Chinese People's *** and State Individual Income Tax Law Enforcement Regulations" and the provisions of the State Taxation (1994) No. 148 document, the following income of people outside the country is exempt from individual income tax: ① in accordance with the provisions of the relevant laws of China should be exempt from taxation of diplomatic representatives of embassies and consulates in China, consular officials and other personnel. ① Diplomatic representatives, consular officials and other personnel of embassies and consulates of various countries in China who should be exempted from tax according to the relevant laws of China ② Individuals who do not have a residence in China, but reside in China for not more than 90 consecutive or cumulative days in a tax year, are exempted from individual income tax on the portion of their income derived from China that is paid for by their employers outside China and is not borne by the employers' organizations or establishments in China.
(27) In accordance with the provisions of (94) Cai Shui Zi No. 020, Guoshuifa (1996) No. 417 and Guoshuifa (197) No. 054, the following incomes of foreigners are temporarily exempted from individual income tax:
1) Reasonable housing subsidies, meal subsidies, relocation expenses and laundry expenses obtained by foreigners in the form of non-cash payments or reimbursements, are temporarily exempted from individual income tax. The individual income tax is temporarily exempted. For housing subsidies, meal subsidies and laundry fees, the taxpayer shall provide valid certificates of the above subsidies to the competent tax authorities when making the tax declaration of salaries and wages in the month following the month when the taxpayer first obtains the above subsidies or when the amount of the above subsidies or the method of payment changes, and the competent tax authorities shall approve the confirmation of the tax exemption. For the relocation expenses, the taxpayer shall provide valid certificates, and the competent tax authorities shall approve and recognize the tax exemption for the reasonable part of the expenses.
② foreign individuals in accordance with reasonable standards for domestic and overseas business trip subsidies, temporary exemption from personal income tax. Such subsidies should be provided by the taxpayer on a business trip, transportation, accommodation vouchers or business arrangements for business plans, the competent tax authorities to confirm the tax exemption.
3 foreign individuals to obtain family visit fees, language training fees, children's education fees, etc., approved by the local tax authorities as a reasonable part of the temporary exemption from personal income tax. For the family visit fee, the taxpayer should provide the transportation expenditure vouchers (copies) for the family visit, and the competent tax authorities will review and approve the part of the fee that is actually used for the family visit and the number of times of the annual family visit and the standard of payment are reasonable to be exempted from tax. For language training fees and children's education fees, the taxpayer shall provide the expenditure vouchers and documents proving the period of receiving the above education in China, and the competent tax authorities shall examine and grant tax exemption to the part of the language training fees and children's education fees subsidized by the taxpayer for receiving language training in China and the children's education in China, which is within a reasonable amount.
4 Foreign individuals are temporarily exempted from personal income tax on dividends and bonus income derived from foreign-invested enterprises.
⑤ The income from wages and salaries of foreign experts in compliance with national regulations is temporarily exempted from individual income tax. Specifically:
A. Income from wages and salaries of foreign experts who are directly assigned to work in China by the World Bank under the World Bank's special loan agreement is temporarily exempted from individual income tax. The so-called "direct dispatch" means that the World Bank signs a technical service agreement with the expert or a technical service agreement with the expert's employer and designates the expert to provide technical services for the relevant project, and the World Bank pays the foreign expert's wages and salaries. When applying for tax exemption, the foreign expert shall provide the relevant contract signed between the expert and the World Bank and the proof that his/her salary and wages are paid and borne by the World Bank.
B. The wages and salaries of experts directly assigned by the United Nations Organization to work in China are temporarily exempted from individual income tax. The term "directly assigned" means that the United Nations organization has signed an agreement on the provision of technical services with the expert or has signed an agreement on the provision of technical services with the expert's employer and has designated the expert to provide technical services for the relevant project, and the United Nations organization pays the wages and salaries of the foreign expert. The United Nations organization refers to the relevant organizations of the United Nations, including the United Nations Development Programme, the United Nations Fund for Population Activities, the United Nations Children's Fund, the United Nations Department of Technical Cooperation, the United Nations Industrial Development Organization, the Food and Agriculture Organization of the United Nations, the World Food Programme, the World Health Organization, the World Meteorological Organization, the United Nations Educational, Scientific and Cultural Organization and so on. When applying for tax exemption, the foreign expert shall provide the relevant contract signed with the United Nations organization and the proof that his/her salary and wages are paid and borne by the United Nations organization.
C. The income from wages and salaries of experts working in China for the United Nations assistance programs shall be temporarily exempted from individual income tax.
D. Income from wages and salaries of experts sent to China by the donor country to work exclusively on its non-reimbursable assistance projects shall be exempted from individual income tax.
E. If an expert in culture and education who comes to China within two years under a cultural exchange program signed by the governments of the two countries has his/her salary and wages borne by that country, his/her salary and wages shall be exempted from individual income tax.
F. Experts who come to China to work under the international exchange programs of China's universities and colleges and whose wages and salaries are paid by their home countries are exempted from individual income tax.
G. Experts who come to China to work through private scientific research agreements and whose wages and salaries are paid by the government of that country are temporarily exempted from individual income tax on their wages and salaries.
(28) In accordance with the regulations, foreign individuals holding B shares or overseas shares (including H shares) are temporarily exempted from individual income tax on the dividends (bonus) income they receive from enterprises in China that issue such B shares or overseas shares.
(29) State Taxation Letter (2002) No. 146 document "State Administration of Taxation on a number of business issues of individual income tax" provides that: individuals leasing property to obtain the property lease income, in calculating the payment of individual income tax, should be deducted the following costs:
① property leasing process of tax payments;
② by the taxpayer the actual expenses of repair costs of leased properties. repair costs actually incurred by the taxpayer for the leased property;
3) the standard deduction for expenses stipulated in the tax law.