Laws of the People's Republic of China

RULES FOR THE IMPLEMENTATION OF THE INDIVIDUAL
INCOME TAX LAW OF THE PEOPLE'S REPUBLIC OF CHINA

(Approved by the State Council on December 10,
1980 and Promulgated by the Ministry of Finance
on December 14, 1980)

 

SUBJECT: TAXATION

ISSUING-DEPT: MINISTRY OF FINANCE

ISSUE-DATE: 12/10/1980

IMPLEMENT-DATE: 12/10/1980

LENGTH: 1834 words

TEXT:

[Article 1] These Rules are formulated in accordance with the provisions of Article 14 of the Individual Income Tax Law of the People's Republic of China (hereinafter referred to as the "Tax Law").

[Article 2] "Any individual residing for one year or more in the People's Republic of China" mentioned in Article 1 of the Tax Law means any individual who has resided in China for 365 days within a tax year.  No subtractions shall be made of the number of days of temporary absence from Chinese territory within the tax year.

The above-mentioned "tax year" means each year on the Gregorian calendar starting on January 1 and ending on December 31.

[Article 3] Individuals who have resided in the People's Republic of China for one year but not more than five years shall pay individual income tax only on that part of their income obtained outside China that is remitted to China; individuals whose period of residence in China exceeds five yeras shall pay tax on all their income obtained outside China beginning with the sixth year.

[Article 4] The scope of categories of income mentioned in Article 2 of the Tax Law is as follows:

(1) "Income from wages and salaries" means income from wages, salaries, awards and year-end bonuses, etc. of individuals who work in government agencies, people's organizations, schools, enterprises, institutions and other units.

"Awards" mentioned in the preceding paragraph do not include awards for scientific, technological or cultural achievements.

(2) "Income from remuneration for personal services" means income of individuals from designing, installation, drafting, medical practice, law practice, accounting, consulting, lecturing, news reporting, broadcasting, free-lance writing, translating, calligraphy and painting, sculputure, films, drama and opera, music, dancing, acrobatics, ballad singing and comic talk, sports, technical services and other personal services.

(3) "Income from royalties" means income from providing and assigning patent rights, copyrights, rights to use proprietary technology and other rights.

(4) "Income from interest, dividends and extra dividends" means income from interest on deposits, loans and vaious kinds of bonds and debentures and income from dividends and extra dividends from investments.

(5) "Income from the lease of property" means income from leasing buildings, machinery and equipment, motorized vehicles and boats and ships, and other kinds of property.

(6) "Other income" means income other than the preceding categories of income that is specified as taxable by the Ministry of Finance of the People's Republic of China.

[Article 5] The following categories of income from sources within the territory of China, regardless of whether or not the place of payment is in China, shall be taxed according to the provisions of the Tax Law:

(1) Income of individuals from work and personal services performed in China.  But remuneration obtained from employers outside China by individuals whose continuous residence in China does not exceed 90 days shall be exempted from taxation.

(2) Dividends and extra dividends received from within the territory of China by individuals.  But dividends and extra dividends received from Chinese-foreign joint ventures and from urban and rural cooperative organizations shall be exempted from taxation.

(3) Remuneration obtained by personnel sent to work abroad by all levels of government agencies of the People's Republic of China.

(4) Royalties and interest obtained within the territory of China by individuals and income from the lease of property within China, as well as other kinds of income specified as taxable by the Ministry of Finance of the People's Republic of China.

[Article 6] A taxpayer who has various categories of taxable income as provided in Article 2 of the Tax Law shall separately compute and pay tax on each category.

[Article 7] If a taxpayer's taxable income is paid in kind or in securities, the monetary equivalent of the amount of income thus paid shall be computed according to the market price at the time the income is obtained.

[Article 8] "Awards for scientific, technological or cultural achievements" mentioned in Article 4, Paragraph 1 of the Tax Law means awards given to individuals by the Chinese Government or by Chinese or foreign scientific, technological, cultural or other organizations for inventions or creations in the fields of science, technology or culture.

[Article 9] "Interest on savings deposits in the state banks and credit co-operatives of the People's Republic of China" mentioned in Article 4, Paragraph 2 of the Tax Law includes interest on savings deposits in Renminbi and foreign currency and interest on savings deposits in other banks entrusted by the state banks.

Dividends from investments by individuals in local development (investment) companies in China shall also be exempted from taxation if no extra dividends are paid and if dividends are not higher than the interest on savings deposits in the state banks and credit co-operatives.

[Article 10] "Salaries of diplomatic officials of foreign embassies and consulates in China" mentioned in Article 4, Paragraph 7 of the Tax Law means the salaries of diplomats of the embassies of foreign countries in China, of consuls and other persons enjoying the same treatment as diplomats.

Tax exemption for the salaries of other personnel of the embassies and consulates of foreign countries in China shall be limited to the same kind of treatment as those countries grant to the personnel of similar status in Chinese embassies and consulates in their countries.

[Article 11] Individuals who do not reside in China shall pay tax on the total amount of their income obtained from personal services, royalties and the lease of property in China.

[Article 12] The "amount received in a single payment" as income from remuneration for personal services, royalties and the lease of property mentioned in Article 5 of the Tax Law means income from a lump-sum payment or income from completing a single piece of work or service, and the amount of income so obtained is counted as a single payment.  Payments of a continuing nature relating to the same item of income that cannot be divided into separate payments may be aggregated as to all such payments successively received within a month and counted as a single payment.

[Article 13] When two or more persons jointly obtain income from the same item, each person may separately deduct expenses on his share of the income, in accordance with the provisions of the Tax Law regarding deductible expenses.

[Article 14] Withholding agents, when making various kinds of payments that are subject to taxation, must withhold the taxes in accordance with the provisions of the Tax Law, turn them over to the state treasury on time and make itemized records for reference.

The various kinds of payments that are subject to taxation mentioned in the preceding paragraph include payment in cash, payment by remittance, payment by the transfer of accounts and the computed monetary value of payments made in securities or in kind.

[Article 15] Withholding agents and taxpayers personally filing returns shall file tax returns within the period prescribed by the Tax Law.  If, because of special reasons, such returns cannot be filed within the prescribed period, an application shall be submitted within the period, and, upon approval by the local tax authorities, the period may be appropriately extended.

The final day of the period for tax payments and for filing returns may be postponed if it falls upon a public holiday.

[Article 16] For individuals residing in China for one year or more, the income obtained outside China shall be computed and taxed separately from the taxable income from within the territory of China.  The amount of tax shall be computed after deducting expenses from each different category of income in accordance with the provisions of Article 5 of the Tax Law.

Taxpayers who have already paid income tax abroad on income gained outside China may, by presenting a tax payment receipt, apply for a credit against the amount of income tax payable as computed according to the tax rate prescribed by the Tax Law of China.

[Article 17] Individual 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 Exchange Control on the day when the tax payment receipt is issued.

[Article 18] Individuals who are obligated to pay tax in China and who need to leave the country shall pay the tax in full to the local tax authorities seven days before departure from China, and only then can they go through exit procedures.

[Article 19] Any officials sent by the tax authorities to conduct investigations concerning tax payments by withholding agents or taxpayers personally filing returns shall produce identification and undertake to maintain confidentiality.

[Article 20] With respect to the 1% service fee to be paid to withholding agents as provided in Article 10 of the Tax Law, the local tax authorities shall each month issue income refund notices to withholding agents, based on the actual amount of tax withheld, and refunding procedures shall be completed at the designated banks.

[Article 21] The tax authorities may, in accordance with the seriousness of the case, impose a fine of 500 yuan or less on withholding agents and taxpayers personally filing returns who have violated the provisions of Article 9 of the Tax Law.

[Article 22] The tax authorities may impose a fine of 500 yuan or less on withholding agents and taxpayers personally filing returns who have violated the provisions of Article 14 or Article 15 of these Rules.

[Article 23] When the tax authorities impose a fine in accordance with the provisions of the Tax Law and these Rules, they shall serve notice of the violation and disposition of the case.

[Article 24] When withholding agents and taxpayers personally filing returns apply for reconsideration of a case in accordance with the provisions of Article 13 of the Tax Law, the tax authorities concerned are required to decide upon the disposition of the case within three months after receiving the application.

[Article 25] Standardized tax returns and tax payment receipts for individual income tax are to be printed by the General Tax Bureau of the Ministry of Finance of the People's Republic of China.

[Article 26] The right to interpret these Rules resides in the Ministry of Finance of the People's Republic of China.

[Article 27] These Rules shall go into effect as of the same date as the Individual Income Tax Law of the People's Republic of China was promulgated and became effective.