The Ministry of Finance and the State Administration of Taxation issued the Circular about Preferential Policy Arrangement after the Amendment of the Individual Income Tax law, effective from January 1, 2019.
A. Some preferential IIT regulation will be last until 2021
1- Annual Bonus
The preferential IIT rate will be continued until 2021. From 1 January 2022, a resident individual who obtains annual bonus shall include the annual bonus into the consolidated income for that year for computation and payment of individual income tax.
2- Severance Payment
The preferential Mehtod will be kept.
3- Expats’ Allawance
During the period from 1 January 2019 to 31 December 2021, an expat who satisfies the resident individual criteria may opt to claim special additional deductions for individual income tax, or opt to enjoy tax exemption policies for subsidies and allowances such as housing allowance, language class fees, children education fee etc. The option made by a foreign individual shall not be changed within a tax year.
From 1 January 2021, expats shall cease to enjoy tax exemption policies for subsidies and allowances such as housing allowance, language class fees, children education fee, and shall claim special additional deductions pursuant to the provisions.
B. Special Deduction is decided
|Expenditures for education of children||1,000 / family /month /child|
|Continuing education||4,800 / person (diploma education)
3,600 / person (vocational qualification)
|Medical treatment of serious diseases||80,000 / person /year||It shall be deducted during annual IIT filing|
|Housing loan interest||1,000 / family /month||These two items cannot be deduct in the same time.|
|Housing rents||1,000 – 1,500 / family / month|
|Raise of parents||2,000 among siblings / month|