Tag : Individual Income Tax

China to Cancel Preferential IIT Policy for Foreigners

Feb. 14 – To resolve income discrepancies in China, the State Council recently released opinions on deepening income distribution reform (Guofa [2013] No.6, hereinafter referred to as the “Opinions”). One of the goals laid out in the Opinions is strengthening tax collection on high incomes and improving the tax system, including cancellation of the preferential tax policy that exempted dividend and bonus incomes received by foreign individuals from individual income tax (IIT).

This preferential policy was originally enacted under the “Policy Issues Regarding Individual Income Tax (Caishuizi [1994] No. 020)” released by the Ministry of Finance (MoF) and the State Administration of Taxation (SAT) in 1994. Pursuant to the issuance of the Opinions, the MoF and the SAT are expected to draw up regulations in the upcoming months subjecting foreigners to the regular 20 percent IIT rate on income derived from investment in foreign-invested enterprises (FIEs) in China. Continue reading →

Posted in Business, Finance, Tax and Accounting | Tagged China Tax, Income Reform, Individual Income Tax | Leave a comment

IIT Calculation for Hong Kong and Macau Residents’ Mainland-Derived Income

May 29 – In order to avoid ambiguities surrounding the double taxation of individuals working between Mainland China and the special administrative regions of Hong Kong and Macau, the State Administration of Taxation (SAT) issued the “Notice on Questions Regarding Tax Arrangements of Individual Employees Working in Both Mainland China and Hong Kong or Macau (SAT Notice [2012] No.16, hereinafter referred as ‘Notice’)” in April, clarifying the calculation of individual income tax (IIT) for related personnel. Continue reading →

Posted in Finance, Tax and Accounting, Legal and Regulatory, Regulatory Update | Tagged China Bonus, China Tax, Filing Taxes, Hong Kong Residents, Individual Income Tax, Macau Residents, Tax on Bonuses | Leave a comment

Severance Pay Subject to Individual Income Tax in China

May 18 – On May 14, officials from China’s State Administration of Taxation answered questions on several hot issues regarding ambiguities in tax payments, clarifying that individual income tax should be paid when an employee receives compensation for termination of their contract.

According to the government officials, if the one-time compensation offered to an employee after the termination of the contract does not exceed three times the local average annual salary of the previous year, the compensation is tax exempt. However, if the amount exceeds this threshold, then the exceeding part of the compensation is subject to individual income tax payment. Continue reading →

Posted in Business, Finance, Tax and Accounting, Legal and Regulatory, Regulatory Update | Tagged China Tax, Individual Income Tax, Severance Pay, State Administration of Taxation | Leave a comment

China’s Ministry of Finance Releases Tax Revenues for Q1 2012

Total tax revenues near RMB2.6 trillion for Q1 2012, but growth is significantly slower than Q1 2011

By Xiaolei Gu

Apr. 25— China’s Ministry of Finance released the country’s tax revenues for the first quarter of 2012 on Tuesday, with highlights including year-on-year (y-o-y) growth in total revenues of 10.3 percent to RMB2.59 trillion (US$410 billion).

However, the 10.3 percent y-o-y growth rate marked the slowest pace recorded in the past three years – down 22.1 percentage points from the year-on-year growth rate recorded in the first quarter of 2011. The growth rates of domestic VAT, excise tax, business tax and corporate income tax dropped 17.8 percent, 6.4 percent, 18.7 percent and 17.4 percent, respectively, compared to the y-o-y growth rates seen in the first quarter of 2011. Continue reading →

Posted in FDI and Foreign Trade, Finance, Tax and Accounting, Legal and Regulatory, Regulatory Update | Tagged Business Tax, China Excise Tax, China Tax, China VAT, Corporate Income Tax, Customs, Individual Income Tax, Land Tax, Ministry of Finance, Q1 2012 Statistics, Real Estate Tax, Tax Revenues | Leave a comment

China-Syria DTA Takes Effect

Nov. 24 – The “Agreement between the Government of the People’s Republic of China and the Government of the Syrian Arab Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (China-Syria DTA)” – signed on October 31, 2010 – came into effect on September 1, 2011, according to the State Administration of Taxation.

The China-Syria DTA – which specifies the definition of a permanent establishment (PE), lists the taxation on different types of incomes, and clarifies the exchange of tax information – will apply to incomes obtained by both countries’ residents from January 1, 2012. The details of the agreement can be found below. Continue reading →