effective from 1st Jan, 2019

China State Administration of Taxation made an announcement regarding new IIT calculation method for tax resident and non- tax resident on 19th Dec 2018. The main change is separate calculation method for tax resident and non-tax resident.

 

Please find below details for your reference.

 

If employees are tax residents

 

–               The individuals who (1) have domicile in China or who (2) do not have domicile but have resided in China for a total of 183 days or more in a tax year (calendar year) will be deemed as a tax resident and shall pay individual income tax on their worldwide income.

 

  • Tax for salary and wages income

 

One new accumulated pre-withholding tax calculation method for tax resident will be applied for salary and wages income on a month basis first and one annual tax filing will occur in 1st Mar to 30th Jun of the following year. If there is any discrepancy between annual pre-withholding tax and annual tax payable, tax refund for overpayments or a supplemental payment for any deficiency is required.

 

 

1)   Calculation logic for pre-withholding tax (on a month basis)

  • Accumulated pre-withholding tax (year to date) = (accumulated taxable income (year to date) – accumulated standard deduction)* yearly tax rate – yearly fast deduction
  • Monthly pre-withholding withholding tax = Accumulated tax (year to date) – tax paid to tax bureau in current year

 

Tips: Accumulated taxable income = Accumulated income (year to date) –accumulated standard deduction(year to date) – accumulated special deduction(year to date)  – accumulated special additional deduction (year to date) – accumulated other deduction (year to date)

 

  Yearly tax table for tax resident
Apply to monthly personal withholding tax calculation
(effective from 1 Jan 2019)
Grade Yearly Taxable amount tax rate fast deduction
1 CNY 0-36000 3% 0
2 CNY 36000-144000 10% 2520
3 CNY 144000-300000 20% 16920
4 CNY 300000-420000 25% 31920
5 CNY 420000-660000 30% 52920
6 CNY 660000-960000 35% 85920
7 above CNY 960000 45% 181920

 

  • Tax for temporary staff

 

Calculation logic for Tax for temporary staff (on a month basis)

  • Remains to existing calculation logic

 

If employees are Non-tax residents

 

–               The individuals having no domicile in China who do not reside in China or have resided in China for less than 183 days in a tax year will be deemed non-tax residents. Non-tax residents will be taxed on their China-sourced income only.

 

For non-tax residents, their IIT is required to calculate on a monthly basis only.

 

1)            Calculation logic for personal withholding tax (on a month basis)

  • Remains to existing calculation logic

 

2)            Calculation logic for Tax for temporary staff (on a month basis)

  • Tax for temporary staff 80% taxable income * tax rate – fast deduction

 

 

 

  Monthly tax table for non-tax resident
Apply to monthly personal withholding tax, tax for temporary staff
(effective from 1 Jan 2019)
Grade monthly Taxable amount tax rate fast deduction
1 CNY 0-3000 3% 0
2 CNY 3000-12000 10% 210
3 CNY 12000-25000 20% 1410
4 CNY 25000-35000 25% 2660
5 CNY 35000-55000 30% 4410
6 CNY 55000-80000 35% 7160
7 above CNY 80000 45% 15160

 

Reference website: http://www.chinatax.gov.cn/n810341/n810755/c3954941/content.html

 

Thanks for your attention.

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