On the 31st, the Standing Committee of the National People s Congress of China voted to pass the amendments to the Personal Income Tax Law. The starting point of each tax was determined to be 5,000 yuan (about US $ 734) per month. In the future, the amount of personal income in each tax year can be reduced by 60,000 yuan (5,000 yuan × December, about 8810 US dollars), as well as special deductions, the latest starting point and tax rate will be implemented from October 1 this year.
The Central News Agency reports that the part related to foreigners working in China is the first article of the new version of the tax law: An individual who has a residence in China or has no residence and has lived in China for 183 days in a tax year is a resident individual. The income it obtains from inside and outside China is subject to personal income tax in accordance with the provisions of this Law.
In other words, foreigners who have lived in China for 183 days during the tax year constitute Chinese tax residents and need to deduct taxes from their global income, making tax avoidance more difficult than before. For those with large overseas income, the impact will be greater.
Accounting experts said that according to the current Chinese regulations, individuals who have no residence in China but have lived for more than 5 years should pay personal income tax on all income derived from outside China from the 6th year. Remaining more than 30 days, equivalent to staying less than one year, can be recalculated for 5 years to achieve a reasonable tax avoidance.
Cheng Lihua, deputy minister of the Ministry of Finance of the People s Republic of China, said that this time the basic income tax deduction standard (that is, the threshold) will be increased from 3,500 yuan per month to 5,000 yuan per month, and 60,000 yuan per year will reduce fiscal revenue for one year RMB 320 billion (approximately USD 46.91947 billion).
The number of taxpayers dropped from 186 million to 63.69 million, which means that after the increase of the levy point, there will be about 120 million fewer people than before, and the low- and middle-income groups will benefit the most.
People s Daily reported that the new individual tax law will be implemented from January 1 next year, but in order to allow taxpayers to enjoy the tax reduction bonus as soon as possible, starting from October 1 this year, the latest starting point of 5000 yuan and a new tax rate table will be implemented.
In terms of tax rates, after this amendment, part of the tax rates for personal income tax has been further optimized and adjusted, expanding the three-level low tax rates of 3%, 10%, and 20%, and reducing the 25% tax rate, but 30%, The higher tax rates of 35% and 45% are unchanged.
The new tax law stipulates that starting from January 1 next year, the new law will combine three types of income, including labor remuneration, manuscript remuneration, and royalties, with wages and salaries to calculate taxes and implement special additional deductions.
Many Future people s expenditures are tax deductible. In the future calculation of personal income tax, in addition to the basic deduction of fees and special deductions such as three insurances and one fund , special additional deductions have been added.
Special additional deductions include children s education, continuing education, critical illness medical treatment, housing loan interest or housing rent, and 赡 pensions and other expenses. The specific scope, standards and implementation steps shall be determined by the State Council and reported to the Standing Committee of the National People s Congress for the record.
Cheng Lihua said that the threshold of 5,000 yuan this time is not a fixed amount. In the future, Chinese officials will also deepen personal income tax reform and make dynamic adjustments to changes in the level of urban residents ’basic consumption expenditures.