The much-anticipated draft amendment on individual income tax has been submitted to the Standing Committee of the National People's Congress for the first discussion on June 19, 2018. The amendment, the seventh tax overhaul since the personal income tax code of 1980, proposed to increase personal income tax threshold to 5,000 yuan per month (60,000 yuan a year) from 3,500 yuan at present.
For the first time, the taxation is expected to cover all personal income, including income from personal services and rewards and royalties writers earn. Also, for the first time, the following items are deductible from personal income tax, such as the cost of children's education and continuing education, medical fees for major diseases, interest on housing loans as well as housing rent.
In order to close tax loopholes, the draft amendment on personal income tax law introduced anti-avoidance clauses, authorizing tax agencies to make appropriate tax adjustments to fight against taxpayers who attempt to evade tax at overseas destinations and adopt unreasonable arrangements to reap illicit tax benefits.