Decision of the Standing Committee of the National People's Congress to Amend the Individual Income Tax Law of the People's Republic of China (passed in the Fifth Session of the Standing Committee of the 13th National People's Congress on 31 August 2018)

31 August 2018

The NPC Standing Committee released the IIT Law on 31 August 2018 and the IIT Law will take effect from 1 January 2019. The major amendments of the existing IIT Law include introducing the "183-day" threshold for assessing the residency status. An individual without domicile in the Mainland who has spent 183 days or more in the Mainland during the relevant tax year would be considered a ‘China resident' for IIT purposes.

Abstract

The NPC Standing Committee released amendment on IIT Law on 31 August 2018.

The major amendments of the existing IIT Law include:

  1. Introducing the "183-day" threshold for assessing the residency status
  2. Revising the income categories and implementing "comprehensive taxation" on wages and salaries, remuneration for labour services and manuscripts, as well as royalty income;
  3. Increasing the standard basic deduction for comprehensive income to RMB 5,000/month (i.e., RMB 60,000/year) and adjusting tax brackets;
  4. Introducing specific additional deductible items such as children's education, continued education, major illness medical treatment, housing cost, and elderly care, etc.
  5. Incorporating anti-tax avoidance rules, arm's length principle, CFC rules and GAAR provision into the IIT Law
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