Laws of the People's Republic of China

PROVISIONAL RULES OF THE PEOPLE'S REPUBLIC OF CHINA
ON INDIVIDUAL INCOME ADJUSTMENT TAX

(Promulgated 25 September 1986 by the State Council)

 

 

SUBJECT: TAXATION

ISSUING-DEPT: STATE COUNCIL OF CHINA

ISSUE-DATE: 09/25/1986

IMPLEMENT-DATE: 01/01/1987

LENGTH: 1374 words

TEXT:

[Article 1] These Rules are formulated in order to adjust income differentials between individual citizens and to enhance the smooth implementation of reforms to develop the economic system.

[Article 2] All Chinese citizens who have a place of residence within the territory of the People's Republic of China and receive an individual income are taxpayers obliged to pay individual income adjustment tax (hereinafter referred to as taxpayers) and all shall pay individual income adjustment tax in accordance with these Rules.

[Article 3] Individual income adjustment tax shall be paid on each of the following items of income:

(i) income from wages and salaries;

(ii) income from contracting and subcontracting;

(iii) income from work-related remuneration;

(iv) income from lease of property;

(v) income from the transfer of patents and the supply and transfer of patent implementation licenses and non-patented technology;

(vi) income from writing for publication and translation;

(vii) income in the form of interest, dividends and bonuses;

(viii) other income determined by the Ministry of Finance as being taxable.

[Article 4] Calculation and collection of individual income adjustment tax will be made in accordance with the progressive tax rates on income in excess of certain multiples of the tax base or the proportional tax rate, depending upon the source of the income.

[Article 5] Income from items (i), (ii), (iii) and (iv) of Article 3 will be amalgamated to make up a person's total income and tax will be levied monthly in accordance with the base figure on which tax calculations are based for the particular region.  Should the taxpayer's monthly composite total be in excess of the base rate on which the region's tax calculations are based, the portion over three times in excess of the base figure will be subject to individual income adjustment tax in accordance with the progressive tax rates on income in excess of certain multiples of the tax base (the table of tax rates is appended).

[Article 6] The base figure for a region's tax calculations may undergo adjustment in accordance with actual conditions.

Any adjustment of the base rate for a region's tax calculations will be framed by the Ministry of Finance in conjunction with the relevant departments and submitted to the State Council for approval of its implementation.

[Article 7] The following individual income will have tax levied in accordance with the relevant proportional tax rate:

(i) where income received from writing for publication, translation transfer of patents and from supplying or transferring patent implementation licenses or non-patented technology is less than 4,000 yuan per time, 800 yuan may be deducted as costs and for imcome of 4,000 yuan or more per time, 20% of the income may be deducted as costs, the balance in both cases being taxable at a proportional rate of 20%;

(ii) income from interest, dividends and bonuses is taxable at a proportional rate of 20% on each payment.

[Article 8] The tax rate for "other income" in item (viii) of Article 3 of these Rules will be determined by the Ministry of Finance.

[Article 9] The following income is exempt from individual income adjustment tax:

(i) prizes and awards for scientific, technological or cultural achievements whic have been issued by a unit at or above the level of the provincial people's government or of ministries and committees of the State Council:

(ii) interest on treasury bonds and financial bonds issued by the State;

(iii) interest on deposits with State banks, credit co-operatives and post offices;

(iv) subsidies and allowances issued in accordance with uniform State regulations:

(v) welfare benefits, pensions for the disabled or the family of a deceased person and relief payments;

(vi) insurance indemnities;

(vii) military severance pay, decommission or demobilisation pay for army officers and soldiers;

(viii) resettlement allowances, severance pay, retirement pensions and retirement wages and living allowances for retired cadres that are paid to cadres and workers in accordance with uniform State regulations;

(ix) other income approved as tax exempt by the Ministry of Finance.

[Article 10] Individual income adjustment tax will be collected in two ways; by the paying unit withholding tax at the source of payment and by the taxpayer filing a personal tax return.

[Article 11] A unit that pays items of income as listed in Article 3 of these Rules to individuals is a withholding agent and shall calculate tax to be withheld in accordance with the following provisions:

(i) withholding tax will be calculated on the portion of each single item of a taxpayer's total income which is more than three times in excess of the local tax base, in accordance with the applicable stipulated tax rates;

(ii) withholding tax will be calculated on the balance remaining after costs have been deducted, in accordance with the provisions of item (i) of Article 7 of these Rules, from income received from writing for publication, translation, transfer of Patents or from Supplying and transferring patent implementation licences or non-patented technology in accordance with the stipulated tax rates;

(iii) withholding tax will be calculated on income from interest, dividends and bonuses in accordance with the tax rate stipulated in item (ii) of Article 7.

[Article 12] A taxpayer whose monthly total income is more than three times in excess of the tax base shall personally declare to the local tax organ the tax to be paid.

A taxpayer who has already had an amount withheld on single items of income shall submit evidence of the fact to the local tax organ so that the amount can be offset against the tax payment to be made.

[Article 13] Taxpayers filing personal tax declarations and withholding agents shall all lodge tax returns at the local tax organ within the first ten days of each month and pay taxable amount or the amount that has been withheld from the previous month.

[Article 14] The tax organ will pay a withholding agent a commission of up to 3% of the amount of withholding tax it has collected.

[Article 15] Control over the collection of tax will be carried out in accordance with the Provisional Rules of the People's of China for the Control of Tax Revenue Collection.

[Article 16] Any person has the right ro inform against and expose a taxpayer who has not paid tax in accordance with the provisions of these Rules.  The tax organ will maintain the confidentiality of the informer and a reward will be given to the informer in accordance with regulations.

[Article 17] The Ministry of Finance will be responsible for the interpretation of these Rules and for the formulation of detailed implementing rules.

[Article 18] These Rules will be effective from 1 January 1987.

APPENDIX

Individual Income Adjustment Tax Rate Table
Category	I	II	III	IV
Applicable	†Region with	Region with	Region with	Region with
Region	†a wage	a wage	†a wage	a wage	Tax
	grade of 6	grade of 7	grade of 9	grade of II	rate
	or under	or 8	or 10
Regional Tax	100 yuan	105 yuan	110 yuan	115 yuan
Base
Multiples	Total Monthly	Taxable Income
in Excess
of the Tax
Base
3 times	††Portion of	Portion of	Portion of	Portion of	20%
	††income	†income	†income	†income
	††between 500	between 420	between 440	between 460
	††& 500 yuan	$ 525 yuan	& 550 yuan	& 575 yuan
4 times	††Portion	Portion	Portion	Portion	30%
	††between 400	between 525	between 550	between 575
	††& 600 yuan	& 630 yuan	& 660 yuan	& 690 yuan
5 times	†Portion	Portion	Portion	Portion	40%
	†between 600	between 630	between 660	between 690
	†& 700 yuan	& 735 yuan	& 770 yuan	& 805 yuan
6 times	Portion	Portion	Portion	Portion
	between 700	between 735	between 770	between 805	50%
	& 800 yuan	& 840 yuan	& 880 yuan	& 920 yuan
7 times	Portion	Portion	Portion	Portion	60%
	above 800	above 840	above 880	above 920
	yuan	yuan	yuan	yuan