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Changes to personal income tax announced
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A NEW system for calculating individual income tax will take effect from January 1, China’s State Administration of Taxation said yesterday.
The changes outline withholding taxes for residents and non-residents based on salaries and other income sources.
For residents, tax will be assessed by the cumulative withholding method — based on the annual figure and paid monthly.
This makes it easier for most taxpayers with only one source of income of wages to do tax filing and settlement themselves, as their withholding tax at the end of the tax year is basically equal to the annual tax payable.
For taxpayers who need to make up tax refunds, the difference between the amount of tax paid in advance and the annual tax payable is relatively small, and it will not take up too much of the taxpayers’ funds, according to the announcement.
For residents, income from remuneration for personal services, author’s remuneration, and royalties, shall be calculated on the basis of the balance of income after deducting expenses from each payment.
The income from salaries of non-residents will be calculated against the balance of monthly income minus expenses of 5,000 yuan (US$725).
For their income from remuneration for labor services and royalties, the balance of income after deducting 20 percent of expenses shall be taken as the amount of taxable income.
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