Laws of the People's Republic of China

Circular of the State Administration of Taxation about the Issues concerning the Exemption of Individual Income Tax on the Commission Incomes Obtained by Insurance Salesmen

Guo Shui Han [2006] No.454

The administrations of local taxes of all the provinces, autonomous regions, municipalities directly under the Central Government, and cities specifically designated in the state plan,

Because of the fierce horizontal competition in the insurance market at present time, the sales expenses of the insurance salesmen have increased accordingly, and the cost for business development cannot be deducted completely pursuant to the existing provisions. For the purpose of promoting the development of the insurance industry, and adjust the tax burden of the insurance salesmen reasonably, we hereby notice as follows:

I.

In accordance with the provisions of the Notice on Clarifying the Composition of the Commissions of Insurance Salesmen (Bao Jian Fa [2006] No.48 ) by the China Insurance Regulatory Commission, the commissions of the insurance salesmen shall consist of the cost for business development and the labor remuneration . In accordance with the provisions of the tax law, no individual income tax shall be levied on the cost for business development in the commission. With regard to labor remuneration, individual income tax shall be levied by deducting the operating tax and associate charge that have been paid actually according to the relevant provisions of the tax law.

According to the present actual conditions on business development by insurance salesmen, the proportion of the cost in the commission for business development shall be determined as 40% for the time being.

II.

The tax authorities at all levels shall calculate and levy tax money in strict accordance with tax law and the aforesaid provisions, and shall not expand the scope of application, specification , and standard of the policy without permission, and shall not implement the policies in violation of the uniform provisions of state.

III.

This Notice shall be implemented as of June 1, 2006. Articles 1, 3, and 5 of the Notice of the State Administration of Taxation on Computation and Collection of Individual Income Tax on the Incomes Obtained by Insurance Salesmen (Non-employees) (Guo Shui Fa [1998] No.13 ) and the Notice of the State Administration of Taxation on Relevant Issues concerning Collection of Individual Income Tax on the Incomes Obtained by Insurance Salesmen (Guo Shui Fa [2002] No.98 ) shall be abolished simultaneously.

State Administration of Taxation

May 15, 2006