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© 2018 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2016 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
China seeks Public Consultation on Draft Amendments to the PRC IIT Law
On 29 June 2018, the National People’s Congress released the full text of the draft amendments to the PRC individual income tax law on its official website seeking consultation from the public. The public consultation program closes on 28 July 2018.
The revised PRC IIT law will take effect 1 January 2019. Prior to implementation, the updated monthly personal deduction of RMB5,000 and adjusted income tax rate bands which have been proposed for the category of Comprehensive Income will be applied to salary and wages earned from 1 October 2018, along with the application of the adjusted tax rate bands for Income from production or business operation conducted by self-employed and income from contractual or leasing operations to enterprises and institutions (see Appendix for the proposed tax rate tables).
The Draft reaffirmed the requirement on monthly provisional filings and annual reconciliation filing, and the corresponding timeframe. It also led to questions being raised by the public on whether certain preferential tax treatments under the existing regulations will remain effective after 1 January 2019.
Implementation of the amended PRC IIT Law and roll out of the accompanying implementation rules will likely to impact on the effectiveness of the reform and impact on:
• The extent of reduction in tax burden for the working class;
• Expansion of the taxation scope of foreign individuals in China, and the associated costs to their onshore and offshore employers;
• High Net Worth Individuals’ global investment strategy and the relevant tax compliance costs
KPMG will continue to share our observations on the IIT reform and the associated impact on taxpayers via alerts and workshops. Please refer to KPMG’s website for details.
Regulations discussed in this issue:
• Draft amendments to the PRC Individual Income Tax (“IIT”) Law (hereafter referred to as “the Draft”).
Issue 16, July 2018
China Tax Alert
© 2018 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2016 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Appendix Individual income tax rates – Comprehensive income
Grade Taxable Income (Annual)
Marginal rate
Quick Deduction
1 not in excess of RMB36,000 3% 0
2 RMB36,000 to RMB144,000 10% 2,520
3 RMB144,000 to RMB300,000 20% 16,920
4 RMB300,000 to RMB420,000 25% 31,920
5 RMB420,000 to RMB660,000 30% 52,920
6 RMB660,000 to RMB960,000 35% 85,920
7 in excess of RMB960,000 45% 181,920
Note: Taxable Income mentioned in this table refers to the amount of Comprehensive Income derived by the tax resident in a tax year, after deduction of the personal deduction of RMB60,000, specific deductions, itemized deductions for specific expenditures, and other deductible items determined by law.
Note: Monthly Taxable Income mentioned in this table refers to the amount of Comprehensive Income derived by a non-resident in a month, after deduction of the personal deduction of RMB5,000, specific deductions, itemized deductions for specific expenditures, and other deductible items determined by law.
Individual income tax rates – Income from operations
Note: Taxable Income mentioned in this table refers to the amount of income after deduction of costs, expenses and losses in a tax year.
Note: Taxable Income mentioned in this table refers to the amount of income after deduction of costs, expenses and losses in a month.
Grade Taxable Income (Monthly) Marginal
rate Quick
Deduction
1 not in excess of RMB3,000 3% 0
2 RMB3,000 to RMB12,000 10% 210
3 RMB12,000 to RMB25,000 20% 1,410
4 RMB25,000 to RMB35,000 25% 2,660
5 RMB35,000 to RMB55,000 30% 4,410
6 RMB55,000 to RMB80,000 35% 7,160
7 in excess of RMB80,000 45% 15,160
Grade Taxable Income (Annual) Marginal
rate Quick
Deduction
1 not in excess of RMB30,000 5% 0
2 RMB30,000 to RMB90,000 10% 1,500
3 RMB90,000 to RMB300,000 20% 10,500
4 RMB300,000 to RMB500,000 30% 40,500
5 in excess of RMB500,000 35% 65,500
Grade Taxable Income (Monthly) Marginal rate
Quick Deduction
1 not in excess of RMB2,500 5% 0
2 RMB2,500 to RMB7,500 10% 125
3 RMB7,500 to RMB25,000 20% 875
4 RMB25,000 to RMB41,666.67 30% 3,375
5 in excess of RMB41,666.67 35% 5,458
© 2018 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2016 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2018 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2016 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The Release on the proposed amendments to PRC IIT Law marks an important step forward on the IIT reform. The imminent reform coupled with the strengthened tax collection and administration system in China, will undoubtedly elevate the importance of individual income tax compliance. With that in mind, enterprises and individual taxpayers should pay close attention to the IIT reform in order to review own circumstances and seek professional advice to avoid unnecessary cost from non-compliance.
If any of the issues could impact you, please contact us.
创新赋能
税道渠成
© 2018毕马威会计师事务所— 香港合伙制事务所，是与瑞士实体— 毕马威国际合作组织(“毕马威国际”) 相关联的独立成员所网络中的成员。© 2018毕马威企业咨询(中国) 有限公司— 中国外商独资企业，是与瑞士实体— 毕马威国际合作组织(“毕马威国际”) 相关联的独立成员所网络中的成员。版权所有，不得转载。毕马威的名称和标识均属于毕马威国际的商标或注册商标。
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© 2018 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
For any enquiries, please send to our public mailbox: [email protected] or contact our partners/directors in each China/HK offices.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate andtimely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on suchinformation without appropriate professional advice after a thorough examination of the particular situation.
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