The draft decision on amending the personal income tax law was deliberated at the fifth session of the 13th NPC Standing Committee on August 27, 2018. The decision is due to take effect from January 1, 2019, the major amendments for the personal income tax law as followings:
Article 1 is amended to read: “A resident individual is an individual who is domiciled in China or who is not domiciled in China but has stayed in the aggregate for 183 days or more of a tax year in China, and shall, in accordance with the provisions of this Law, pay individual income tax on his or her income obtained inside and outside China.
“A nonresident individual is an individual who neither is domiciled in China nor stays in China or who is not domiciled in China but has stayed in the aggregate for less than 183 days of a tax year in China, and shall, in accordance with the provisions of this Law, pay individual income tax on his or her income obtained inside China.”
Article 6 is amended to read: “Calculation of the amount of taxable income:
“(1) For the comprehensive income of a resident individual, the amount of taxable income shall be the balance after subtracting expenses of 60,000 yuan, special deductibles, special additional deductibles, and other deductibles determined in accordance with the law from the amount of income obtained in a tax year. Special deductibles include but are not limited to contributions to the basic pension insurance, basic medical insurance, unemployment insurance, and other social insurance and housing provident funds paid by resident individuals in accordance with the scopes and standards specified by the state. Special additional deductibles include but are not limited to expenditures for education of children, continuing education, medical treatment of serious diseases, housing loan interest, housing rents and raise of elderly
(4) For the income from the lease of property, the amount of taxable income shall be the balance after subtracting expenses of 800 yuan from the income if the income is less than 4,000 yuan each time; and the amount of taxable income shall be the balance after subtracting expenses at 20% from the income if the income is 4,000 yuan or more each time.
The amount of income from author's remuneration shall be calculated at 70% of the income obtained.
The donations made by an individual to the educational cause and other public welfare and charitable causes shall be deducted from the taxable income in accordance with the relevant provisions issued by the State Council.
One article is added as Article 14: “Public security, people's bank, financial regulation, and other relevant departments shall assist tax authorities in confirming the identity and bank account information of taxpayers. Education, health, medical insurance, civil affairs, human resources and social security, housing and urban-rural development, people's bank, financial regulation, and other relevant departments shall provide tax authorities with information on special additional deductibles such as education of children, continuing education, medical treatment of serious diseases, housing loan interest, and housing rents of taxpayers.
XVI. Schedule 1 of Individual Income Tax Rates (applicable to income from wages and salaries) is amended to read:
Schedule 1 of Individual Income Tax Rates (applicable to comprehensive income)
Brackets Annual Taxable Income Tax Rate (%)
| 1 | Up to 36,000 yuan | 3% |
| 2 | Over 36,000 yuan nor more than 144,000 yuan | 10% |
| 3 | Over 144,000 yuan nor more than 300,000 yuan | 20% |
| 4 | Over 300,000 yuan nor more than 420,000 yuan | 25% |
| 5 | Over 420,000 yuan nor more than 660,000 yuan | 30% |
| 6 | Over 660,000 yuan nor more than 960,000 yuan | 35% |
| 7 | Over 960,0000 yuan | 45% |
(Notes: 1. For the purposes of this Schedule, “annual taxable income” means the balance of comprehensive income obtained by a resident individual after subtracting expenses of 60,000 yuan, special deductibles, special additional deductibles, and other deductibles determined in accordance with the law from the amount of income in a tax year, in accordance with the provision of Article 6 of this Law.
- The amount of tax payable on comprehensive income obtained by a nonresident individual shall be calculated on a monthly basis after conversion in accordance with this Schedule.)
XVII. Schedule 2 of Individual Income Tax Rates (applicable to income from the production or operation of an individual industrial and commercial household and the income from the contracted operation or leased operation of an enterprise or public institution) is amended to read:
Schedule 2 of Individual Income Tax Rates (applicable to business income)
Brackets Amount of Annual Taxable Income Tax Rate (%)
| 1 | Up to 30,000 yuan | 5% |
| 2 | Over 30,000 yuan nor more than 90,000 yuan | 10% |
| 3 | Over 90,000 yuan nor more than 300,000 yuan | 20% |
| 4 | Over 300,000 yuan nor more than 500,000 yuan | 30% |
| 5 | Over 500,000 yuan | 35% |
(Note: For the purposes of this Schedule, “annual taxable income” means the balance after subtracting costs, expenses and losses from the gross income in a tax year in accordance with the provision of Article 6 of this Law.)