Regulation on the Implementation of the Individual Income Tax Law of the People's Republic of China, as amended 2018

Regulation on the Implementation of the Individual Income Tax Law of the People's Republic of China, as amended 2018 Order of the State Council of the People's Republic of China (No. 707) The Regulation on the Implementation of the Individual Income Tax Law of the People's Republic of China, as amended, is hereby issued and shall come into force on January 1, 2019. Premier: Li Keqiang December 18, 2018 Regulation on the Implementation of the Individual Income Tax Law of the People's Republic of China (Issued by Order No. 142 of the State Council of the People's Republic of China on January 28, 1994, amended for the first time in accordance with the Decision of the State Council to Amend the Regulation on the Implementation of the Individual Income Tax Law of the People's Republic of China on December 19, 2005, amended for a second time in accordance with the Decision of the State Council to Amend the Regulation on the Implementation of the Individual Income Tax Law of the People's Republic of China on February 18, 2008, amended for a third time in accordance with the Decision of the State Council to Amend the Regulation on the Implementation of the Individual Income Tax Law of the People's Republic of China on July 19, 2011, and amended for the fourth time by Order No. 707 of the State Council of the People's Republic of China on December 18, 2018) Article 1 This Regulation is developed in accordance with the Individual Income Tax Law of the People's Republic of China (hereinafter referred to as the “ Individual Income Tax Law ”). Article 2 For the purpose of the Individual Income Tax Law , “is domiciled in China” means habitually residing inside China due to household registration, family or economic ties; and “income obtained inside and outside China” means income derived from inside and outside China respectively. Article 3 Unless it is otherwise provided for by the finance or taxation department of the State Council, the following categories of income, notwithstanding the payment thereof is made inside China or not, shall be considered income derived from inside China: (1) Income obtained from the provision of labor services inside China due to holding the posts, being employed or performing contracts, among others. (2) Income obtained from the lease of property to lessees for use inside China. (3) Income obtained from granting various franchises to be used inside China. (4) Income obtained from the conveyance of real estate and other property inside China or income obtained from the conveyance of other property inside China. (5) Income from interest, dividends and bonuses obtained from enterprises, public institutions and other economic organizations and resident individuals inside China. Article 4 Where the number of years in each of which an individual who does not have a residence in China has stayed for a total of 183 days or more in China is less than 6 years consecutively, he or she may, after filing a report with the tax authority having jurisdiction, be exempt from individual income tax on his or her income derived from outside China paid by overseas entities or individuals; and where the taxpayer had left China for 30 days or more in a single trip in any of the years in each of which he or she has stayed for a total of 183 days or more in China, the starting time of the specified consecutive years in each of which he or she has stayed for a total of 183 days or more in China shall be recounted. Article 5 An individual who does not have a residence in China and has stayed in China for a total of less than 90 days during a tax year shall be exempt from individual income tax on the part of his or her income which is derived from inside China and paid by employer outside China and not borne by the employer's institutions or venues inside China. Article 6 The scope of various categories of individual income as mentioned in the Individual Income Tax Law is as follows: (1) Income from wages and salaries, which means the income from wages, salaries, bonuses, year-end salary increases, labor dividends, and allowances obtained by individuals due to their job or employment and subsidies and other income related to their job or employment. (2) Income from remunerations for labor services, which means the income obtained by individuals from providing labor services, including income obtained from services in designing, decoration, installation, drafting, chemical examination, testing, medical treatment, law practice, accounting, consulting, lecturing, translating, proof-reading, calligraphy and painting, sculpture, film and television, audio and video recording, performance, advertisement, exhibition, technical services, go-between service, brokerage service, commissioned services and other labor services. (3) Income from authorship remunerations, which means the income obtained by individuals from the publication of their works in the form of books, newspaper articles or periodical articles, among others. (4) Income from royalties, which means the income obtained by individuals from providing patent rights, trademark rights, copyrights, rights to use non-patented technologies and other franchises. Income from providing the rights to use copyrights excludes income from authorship remunerations. (5) Business income, which means: (a) income obtained by individual industrial and commercial households from production and business activities, and income of investors of sole proprietorship enterprises and individual partners of partnership enterprises derived from the production and business activities of the sole proprietorship enterprises and partnership enterprises registered inside China; (b) income obtained by individuals from running schools or providing medical treatment, consultation and other paid services in accordance with the law; (c) income obtained by individuals from the contracted operation and leased operation of enterprises and public institutions and subcontracting and sublease; and (d) income obtained by individuals from engaging in other production and business activities. (6) Income from interest, dividends and bonuses, which means the income of interest, dividends and bonuses obtained by individuals from their ownership of creditor's rights and equities, among others. (7) Income from the lease of property, which means the income obtained by individuals from leasing of their real estate, machinery and equipment, motor vehicles and ships and other property. (8) Income from the conveyance of property, which means the income obtained by individuals from transfer of negotiable securities, equities, property shares in partnership enterprises, real estate, machinery and equipment, motor vehicles and ships and other property. (9) Contingent income, which means individuals' income from getting awards, winning prizes in lotteries and other windfalls. When it is difficult to define the categories of the taxable income obtained by an individual, it shall be determined by the taxation department of the State Council. Article 7 The measures for the collection of individual income tax on income from the transfer of stocks shall be provided for separately by the State Council and be filed with the Standing Committee of the National People's Congress. Article 8 Individual income includes income in cash, income in kind, income in negotiable securities and income in economic benefits of other forms; for income in kind, the amount of taxable income shall be calculated based on the price indicated on the certificate obtained; in case there is no certificate for income in kind or the price......