June 2019 / China

On 19 June 2019, the Italian Council of Ministers approved the China (People's Rep.) - Italy Income Tax Treaty (2019). Further developments will be reported as they occur.

Premier Li Keqiang chaired a State Council executive meeting on May 29, 2019. The meeting decided that China will take more steps to boost community-based elderly care, childcare and domestic services, including greater policy incentives in taxes and fees.   Between June 1, 2019 and the end of 2025, revenue from community-based elderly care, childcare and domestic services will be exempted from the value-added tax, and enjoy a 10-percent deduction in taxable income. Those providing real estate or land for any related services will be exempted from deed tax, property tax, urban land use tax and six types of fees, including registration fee for real estate. The scope of VAT exemption for domestic services companies with contract-based employment will be expanded.

Premier Li Keqiang chaired a State Council executive meeting on June 5, 2019, and decided to adopt more measures to further implement the innovation-driven development strategy and execute favorable tax policies to encourage research & development activities   The meeting decided to adopt more steps to drive business start-ups and innovation to further implement the innovation-driven strategy and energize the vitality of market players. The important role of business start-ups and innovation will be harnessed in supporting employment and promoting technology and innovation. It was also decided at the meeting to build platforms for business start-ups and innovation, and to promote the integrated development of companies in different sizes. The Internet Plus model will be upgraded. Financial institutions will be guided to lower real interest rates and overall cost for loans to micro and small enterprises. A higher ratio of nonperforming loans made to micro and small firms will be allowed. The non-performing loan ratio of such loans will be relaxed to no more than 3 percentage points higher than the overall NPL ratio, from the current 2 percentage points.

Guangdong Department of Finance issued on June 22, 2019 the Circular about Implementing Preferential Individual Income Tax Policies at the Guangdong-Hong Kong-Macau Greater Bay Area. The circular has been effective from January 1, 2019 and might be amended one year later. According to the circular, high-end and badly-needed overseas talents working in the GBA can be eligible to claim fiscal subsidies if their individual income tax rate is more than 15%. The subsidies will be granted by municipal governments of nine GBA cities in the mainland. According to the circular, the fiscal subsidies will cover such forms of income as wages, remuneration for personal services, royalties, business income, as well as allowances for honorary talent programs. The subsidies are designed to encourage foreign professionals to work and create their own businesses in the GBA.

The announcement regulates the type of income which once belonged to “other income” shall now belong to “Contingent income”. The taxable rate is still kept at 20%. Related income includes: 1)         Income from providing guarantees to others; 2)         Income from receiving house donated by others (taxable scope is same as before); 3)         Gifts income from an enterprise to individuals who are non-staff of the enterprise randomly in business promotion, advertising, etc.; 4)         Gifts income from an enterprise to individuals who are non-staff of the enterprise at annual meetings, seminars, celebration events and other activities; However, gifts income from consumer vouchers、cash vouchers、exchange coupon and discount coupon given by enterprises with price discount or concession nature can be exempted from IIT. Furthermore, the announcement also regulates that individual shall pay IIT when he/she begins to get pension income from Individual Tax-deferred Commercial Pension Insurance. The income shall belong to “Income from wages and salaries”, and taxable at 75%*10%=7.5%.