September 2018 - The PRC Law on Individual Income Tax (“IIT”) Amendments Approved
On 31 August, the Standing Committee of China’s National People’s Congress formally approved the Amendments to the PRC Law on IIT (the “Amendments”).
The key changes that will affect individual expatriates and their employers include:
- Revising the criteria for determining tax residency status;
- Implementing a mixture of aggregate and scheduler taxation system to replace the old scheduler taxation system;
- Amending the tax rates and taxable income brackets;
- Increasing the standard basic deduction and introducing additional specific deductible items;
- Introducing a unique taxpayer identification number; and
- Introducing an anti-tax avoidance rule.
The Amendments are indeed signifying an overhaul of the IIT system.
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