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.