Laws of the People's Republic of China

the Ministry of Finance, the State Administration of Taxation

Circular of the Ministry of Finance and the State Administration of Taxation on Straightening out and Reporting the Tax Deduction or Exemption Items and Tax-free Items as well as the Relevant Standards regarding Individual Income Taxes

Cai Shui [2005] No. 193

December 28, 2005

The public financial departments (bureaus) and the local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government, and cities as specifically designated in the state plan,

In accordance with the provisions of the newly amended Individual Income Tax Law and the Regulations on the Implementation thereof as well as the requirements of the State Council on intensifying the administration of tax collection pursuant to law, and with a view to unifying the tax system, regulating the tax base, stopping up loopholes in the administration of tax collection and guaranteeing the sound implementation of the Individual Income Tax Law, the Ministry of Finance and the State Administration of Taxation have decided to straighten out the tax deduction or exemption items and tax-free items as well as the relevant standards regarding the individual income tax, you are hereby notified of the relevant issues as follows:

1.

The public financial departments and tax authorities of all regions shall, upon receipt of the present Circular, pay great attention to it and make deliberate deployments, straighten out the tax deduction or exemption items and tax-free items in strict accordance with the relevant requirements and faithfully report the situation.

2.

The scope of straightening-out and reporting shall be the tax deduction or exemption items and tax-free items as well as relevant standards. The contents subject to straightening-out and reporting shall be filled out in Annex I or II for Chinese citizens and foreigners respectively.

3.

During the course of straightening-out, no region may unlawfully enlarge the application scope of the tax deduction or exemption items and tax-free items or raise the relevant standards, nor may it bind up all the tax deduction or exemption items and tax-free items and apply it in fixed amount to all of those taxpayers whose income comes from wages and salaries.

Any region that violates the Individual Income Tax Law or any provision as uniformly prescribed by the state by overstepping its power to set down any item for tax deduction or exemption or non-taxation or unlawfully raising any standard for tax deduction before the present Circular goes into effect, shall be dealt with according to document No. 183 [2005] of the Ministry of Finance.

4.

The straightening-out process shall be reported, both in paper form and by electronic means, to the Taxation Reform Department of the Ministry of Finance and the Income Tax Department of the State Administration of Taxation.

Contact person:

Taxation Reform Department of the Ministry of Finance Ma Jing

Telephone: 010-68552571

E-mail: jing.ma@mof.gov.cn

Income Tax Department of the State Administration of Taxation Yao Yuan

Telephone: 010-63417876

E-mail: yy@chinatax.gov.cn

Annexes:

Annex I: Form on Straightening Out the Tax Deduction or Exemption Items and Tax-free Items and Relevant Standards (for Chinese Citizens)

Annex II: Form on Straightening out the Tax Deduction or Exemption Items and Tax-free Items and Relevant Standards (for Foreigners) htm/e04653.htm

Annex I:

Form on Straightening Out the Tax Deduction or Exemption Items and Tax-free Items and Relevant Standards (for Chinese Citizens)

Unit: Yuan

　　Note: Line 8 shall be filled out an item-by-item manner

Annex II:

Form on Straightening out the Tax Deduction or Exemption Items and Tax-free Items and Relevant Standards(for Foreigners)

Unit: Yuan

　　Note: Line 13 shall be filled out an item-by-item manner