Individual Income Tax Law of the People's Republic of China (2018 Amendment)

Individual Income Tax Law of the People's Republic of China (2018 Amendment) Individual Income Tax Law of the People's Republic of China (Adopted by the Third Session of the Fifth National People's Congress on September 10, 1980, amended for the first time in accordance with the Decision of the Fourth Session of the Standing Committee of the Eighth National People's Congress Concerning Amendment to the Individual Income Tax Law of the People's Republic of China on October 31, 1993; and amended for the second time in accordance with the Decision of the 11th Session of the Standing Committee of the Ninth National People's Congress Concerning Amendment to the Individual Income Tax Law of the People's Republic of China on August 30, 1999; amended for the third time in accordance with the Decision of the 18th Session of the Standing Committee of the Tenth National People's Congress on Amending the Individual Income Tax Law of the People's Republic of China on October 27, 2005; amended for the fourth time in accordance with the Decision of the 28th Session of the Standing Committee of the Tenth National People's Congress on Amending the Individual Income Tax Law of the People's Republic of China on June 29, 2007; amended for the fifth time in accordance with the Decision of the 31st Session of the Standing Committee of the Tenth National People's Congress on Amending the Individual Income Tax Law of the People's Republic of China on December 29, 2007; amended for the sixth time in accordance with the Decision of the 21st Session of the Standing Committee of the Eleventh National People's Congress on Amending the Individual Income Tax Law of the People's Republic of China on June 30, 2011; and amended for the seventh time in accordance with the Decision of the fifth Session of the Standing Committee of the Thirteenth National People's Congress to Amend the Individual Income Tax Law of the People's Republic of China on August 31, 2018) Article 1 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. A resident individual 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. A nonresident individual shall, in accordance with the provisions of this Law, pay individual income tax on his or her income obtained inside China. Tax year means the Gregorian calendar year that runs from January 1 to December 31. Article 2 Individual income tax shall be paid on the following individual income: (1) Income from wages and salaries. (2) Income from remuneration for labor services. (3) Income from author's remuneration. (4) Income from royalties. (5) Business income. (6) Income from interest, dividends and bonuses. (7) Income from the lease of property. (8) Income from the conveyance of property. (9) Contingent income. Resident individuals shall calculate by tax year on a consolidated basis the individual income tax, and nonresident individuals shall calculate by itemization on a monthly or transaction-by-transaction basis the individual income tax, on the income obtained as set forth in subparagraphs (1) to (4) of the preceding paragraph (hereinafter referred to as the ‘comprehensive income'). The individual income tax on the income set forth in subparagraphs (5) to (9) of the preceding paragraph obtained by a taxpayer shall be calculated respectively in accordance with the provisions of this Law. Article 3 Individual income tax rates: (1) Progressive tax rates ranging from 3% to 45% (see the attached tax rate schedule) shall apply to comprehensive income. (2) Progressive tax rates ranging from 5% to 35% (see the attached tax rate schedule) shall apply to business income. (3) The proportional tax rate of 20% shall apply to income from interest, dividends and bonuses, income from the lease of property, income from the conveyance of property, and contingent income. Article 4 Individual incomes set forth below shall be exempt from individual income tax: (1) prizes in science, education, technology, culture, health, sports and environmental protection awarded by provincial people's governments, ministries and commissions under the State Council and units of the People's Liberation Army at or above the army level, as well as by foreign organizations and international organizations; (2) interest accruing from treasury bonds and financial bonds issued by the State; (3) subsidies and allowances distributed according to the unified regulations of the State; (4) welfare benefits, pensions for the disabled or for the family of the deceased and relief payment; (5) insurance compensation; (6) military severance pay, demobilization pay and retirement pay for military personnel; (7) settling-in allowance, severance pay, retirement wages, retirement wages for veteran cadres, and living allowances and subsidies for retired veteran cadres distributed to cadres and workers according to the unified regulations of the State; (8) incomes of diplomatic representatives, consular officers and other personnel of foreign embassies and consulates in China, which, pursuant to the provisions of relevant laws, shall be exempt from tax; (9) incomes which shall be exempt from tax under the international conventions to which the Chinese Government is a member or agreements which the Chinese Government has signed; and (10) Other tax-exempt income as prescribed by the State Council. The tax exemptions prescribed in subparagraph (10) of the preceding paragraph shall be filed by the State Council with the Standing Committee of the National People's Congress. Article 5 Under any of the following circumstances, individual income tax may be reduced, the specific scope and time limit shall be prescribed by the people's government of the province, autonomous region, or municipality directly under the Central Government, and be filed with the standing ......