Laws of the People's Republic of China

   Article 1. Individual income tax shall be paid in accordance with the provisions of this Law by individuals who have resided for one year or more in the People's Republic of China on their income gained within or outside China.

Individuals not residing in the People's Republic of China and individuals who have resided in China for less than one year shall pay individual income tax only on their income gained within China.

   Article 2. Individual income tax shall be paid on the following categories of income:

(1) income from wages and salaries;

(2) income from remuneration for personal services;

(3) income from royalties;

(4) income from interest, dividends and bonuses;

(5) income from the lease of property; and

(6) other income specified as taxable by the Ministry of Finance of the People's Republic of China.

   Article 3. Individual income tax rates:

(1) Income from wages and salaries in excess of specified amounts shall be taxed at progressive rates ranging from 5 percent to 45 percent (see the appended tax rate schedule).

(2) Income from remuneration for personal services, royalties, interest, dividends, bonuses and the lease of property and other income shall be taxed at a flat rate of 20 percent.

   Article 4. The following categories of income shall be exempted from individual income tax:

(1) awards for scientific, technological and cultural achievements;

(2) interest on savings deposits in the state banks and credit cooperatives of the People's Republic of China;

(3) welfare benefits, survivors pensions and relief payments;

(4) insurance indemnities;

(5) military severance pay and demobilization pay for officers and soldiers of the armed forces;

(6) severance pay and retirement pay for cadres, staff members and workers;

(7) salaries of diplomatic officials of foreign embassies and consulates in China;

(8) income exempted from tax as stipulated in the international conventions to which the Chinese Government is a party and in agreements it has signed; and

(9) income exempted from tax with the approval of the Ministry of Finance of the People's Republic of China.

   Article 5. The amount of various kinds of taxable income shall be computed as follows:

(1) For income from wages and salaries, a monthly deduction of 800 yuan shall be allowed for expenses, and that part in excess of 800 yuan shall be taxed.

(2) For income from remuneration for personal services, royalties and the lease of property, a deduction of 800 yuan shall be allowed for expenses, if the amount received in a single payment is less than 4,000 yuan; for single payments of 4,000 yuan or more, a deduction of 20 percent shall be allowed for expenses. The remaining amount shall be taxed.

(3) Income from interest, dividends, bonuses and other income shall be taxed on the amount received in each payment.

   Article 6. For individual income tax, the income earner shall be the taxpayer, and the paying unit shall be the withholding agent. In case there is no withholding agent, the taxpayer shall file a return and pay tax himself.

   Article 7. The tax withheld each month by a withholding agent and the tax to be paid each month by a taxpayer personally filing a return shall be turned in to the State Treasury and the tax return submitted to the tax authorities within the first seven days of the following month.

A taxpayer who earns income outside China shall pay the tax due to the State Treasury and submit a tax return to the tax authorities within 30 days after the end of each year.

   Article 8. All categories of income shall be computed in terms of Renminbi (RMB). Income in foreign currency shall be taxed on the equivalent amount converted into Renminbi according to the foreign exchange rate quoted by the State General Administration of Foreign Exchange Control of the People's Republic of China.

   Article 9. The tax authorities shall have the right to inspect the payment of tax. Withholding agents and taxpayers personally filing tax returns must make reports according to the facts and provide all relevant information. They may not refuse to cooperate and may not conceal the facts.

   Article 10. A service fee of one percent of the amount of tax withheld shall be paid to the withholding agents.

   Article 11. Withholding agents and taxpayers personally filing returns must pay tax within the prescribed time limit. In case of failure to do so, the tax authorities, in addition to setting a new time limit for tax payment, shall impose a surcharge for overdue payment equal to 0.5 percent of the overdue tax for every day in arrears, starting from the first day payment becomes overdue.

   Article 12. The tax authorities may, in the light of the circumstances, impose a fine on a withholding agent or a taxpayer personally filing a return who has violated the provisions of Article 9 of this Law.

In dealing with those who have concealed income or evaded or refused to pay tax, the tax authorities may, in addition to pursuing the tax payment, impose a fine up to but not exceeding five times the amount of the tax underpaid or not paid, in accordance with the seriousness of the case. Cases of gross violation shall be handled by the local people's courts in accordance with the law.

   Article 13. In case of a dispute with the tax authorities over tax payment, a withholding agent or a taxpayer personally filing a return must pay the tax as prescribed before applying to higher tax authorities for reconsideration. If he does not accept the decision made after such reconsideration, he may bring a lawsuit before a local people's court.

   Article 14. Rules for the implementation of this Law shall be formulated by the Ministry of Finance of the People's Republic of China.

   Article 15. This Law shall go into effect on the day of its promulgation.