May 14 – China’s State Administration of Taxation (SAT) issued the “Announcement on the Individual Income Tax Declaration Form (Announcement  No.21, hereinafter referred to as the ‘Announcement’)” on May 9, which is scheduled to take effect on August 1, 2013. The Announcement has made revisions to the current individual income tax (IIT) declaration system in the following three areas:
- Strengthening tax information collection
- Streamlining declaration forms and simplifying declaration content
- Unifying standards regarding declared data
Strengthening tax information collection
The Announcement has introduced two new forms to improve the collection of basic tax information, one is for IIT declarations by withholding agents, and the other is for IIT declarations by taxpayers.
Streamlining declaration forms and simplifying declaration content
To effectively relieve the tax declaration burden on withholding agents and taxpayers, the Announcement has cut the various types of IIT declaration forms to 12. For example, the six forms under the production and business operation category have been reduced to three, and the five forms regarding the tax return and declaration have been cut to three as well.
Unifying standards regarding declared data
To facilitate electronic tax declarations by taxpayers and encourage the application of information technology to the tax declaration process, the Announcement has unified the standards regarding the declared data.
The newly-added and revised forms are as follows:
- Basic Information Form on Individual Income Tax (A): Applicable to IIT declarations by withholding agents.
- Basic Information Form on Individual Income Tax (B): Applicable to IIT declarations by taxpayers.
- Declaration Form on Individual Income Tax Withheld: Applicable to IIT declarations by withholding agents.
- Annual Declaration Form on Individual Income Tax Withheld for Employees in Particular Industries: Applicable to the annual IIT declaration on wages and salaries for employees in particular industries.
- Individual Income Tax Self-Declaration Form (A): Applicable to wages or salaries derived from two or more sources within China and the taxable income of taxpayers who don’t have a witholding agent.
- Individual Income Tax Declaration Form (B): Applicable to income derived from overseas.
- Declaration Form on Income Derived from Production or Business Operations (A): Applicable to pre-tax declarations of individual businesses, operators in the contracting or leasing business, investors of individual proprietorship enterprises, and partners of partnership enterprises.
- Declaration Form on Income Derived from Production or Business Operations (B): Applicable to the annual IIT settlement of individual businesses, operators in the contracting or leasing business, investors of individual proprietorship enterprises, and partners of partnership enterprises.
- Annual Declaration Form on Income Derived from Production or Business Operations: Applicable to annual tax declarations on income derived from production and business operations by investors who have set up two or more individual businesses, contracting and leasing institutions, individual proprietorship enterprises, or partnership enterprises.
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In this issue of China Briefing Magazine, we discuss annual compliance requirements for China foreign-invested entities and detail the full audit processes for representative offices, wholly foreign owned enterprises, and joint ventures in China. We also discuss IIT liability for expatriates in China, IIT rates and calculation methods, permissible tax deductions, and how working for a permanent establishment can change tax liabilities.
China Expat Tax Filing and Declarations for 2012 Income
China to Cancel Preferential IIT Policy for Foreigners
Income Tax Withheld at Source for Non-Resident Enterprises