China: Amendment to the Individual Income Tax was Proposed to relieve the tax burden for People with Middle or Low Income
On June 19, 2018, the 3rd session of the Standing Committee of the 13th National People’s Congress undertook the first review of the Amendment to the Individual Income Tax Law of the People’s Republic of China (Draft) (hereinafter the “Draft”). Pursuant to the Draft, the individual income tax exemption threshold will be raised from RMB 3,500 per month to RMB 5,000 per month (i.e. RMB 60,000 per year). In addition, the Draft expands the income range applicable by the three tiers of low tax rate (3%, 10%, 20%), and narrow the income range applicable by the rate of 25% accordingly, while the income range applicable by the three tiers of high tax rate (30%, 35%, 45%) remain unchanged. Moreover, the Draft adds five special additional pre-tax deduction to be free of individual income tax, namely children’s education expenditure, continuing education expenditure, medical expenses for serious illness, interests of housing loans and housing rent. The Draft was released on the official website of the National People’s Congress on June 29, 2018 and will be open for public opinion or comment till the end of July.