Implementing Regulations of the Individual Income Tax Law of the People's Republic of China (Revised in 2011)

Order of the State Council of the People's Republic of China No. 600

July 19, 2011

(Promulgated on January 28, 1994 in accordance with the Order No. 142 of the State Council of the People's Republic of China; first revised in accordance with the Decision of the State Council on the Revision of the Implementing Regulations of the Individual Income Tax Law of the People's Republic of China made on December 19, 2005; secondly revised in accordance with the Decision of the State Council on the Revision of the Implementing Regulations of the Individual Income Tax Law of the People's Republic of China made on February 18, 2008; and thirdly revised in accordance with the Decision of the State Council on the Revision of the Implementing Regulations of the Individual Income Tax Law of the People's Republic of China made on July 19, 2011)

Article 1 These Regulations are formulated in accordance with the Individual Income Tax Law of the People's Republic of China (the "Tax Law").

Article 2 For the purposes of the first paragraph of Article 1 of the Tax Law, "individuals domiciled in the People's Republic of China" means individuals who, by reason of their permanent residence, family or economic interests, habitually reside in the People's Republic of China.

Article 3 For the purposes of the first paragraph of Article 1 of the Tax Law, "have resided in the People's Republic of China for no less than one year" means to have resided within the People's Republic of China for 365 days of a tax year. No deduction from that number of days shall be made for temporary trips out of the People's Republic of China.
For the purposes of the preceding paragraph, "temporary trips out of the People's Republic of China" means absence from the People's Republic of China for no more than 30 days in a single trip, or no more than a cumulative total of 90 days over two or more trips, within the same tax year.

Article 4 For the purposes of the first and second paragraphs of Article 1 of the Tax Law, "income derived from sources inside the People's Republic of China" means income sourced from inside the People's Republic of China, and "income derived from sources outside the People's Republic of China" means income sourced from outside the People's Republic of China.


Article 5 Whether or not the place of payment is inside the People's Republic of China, the following types of income shall be deemed to be income derived from sources inside the People's Republic of China:
1. Income for personal services provided inside the People's Republic of China through the holding of any office, employment, the performance of a contract, etc.;
2. Income derived from the leasing of property to a lessee for use inside the People's Republic of China;
3. Income derived from the assignment of property such as any building or other structure, land use rights, etc. inside the People's Republic of China or from the assignment inside the People's Republic of China of any other property;
4. Income derived from the licensing for use inside the People's Republic of China of any kind of licensing rights; and
5. Interest, dividend and special dividend income derived from any company, enterprise or other economic organization or individual inside the People's Republic of China.

Article 6 For income derived from sources outside the People's Republic of China by any individual not domiciled in the People's Republic of China, but who has resided in the People's Republic of China for between one and five years, subject to the approval of the competent tax authority, individual income tax may be paid only on that part of his income that is derived from companies, enterprises and other economic organizations or individuals inside the People's Republic of China. Any individual who has resided in the People's Republic of China for more than five years shall, commencing from the sixth year, pay individual income tax on all the income derived from sources outside the People's Republic of China.


Article 7 For any individual who is not domiciled in the People's Republic of China, but who has resided in the People's Republic of China for a consecutive or aggregate period of no more than 90 days in a tax year, that part of his income that is derived from sources inside the People's Republic of China but is paid by an employer outside the People's Republic of China, and which is not borne by any organization or office of the relevant employer located within the People's Republic of China, shall be exempt from individual income tax.


Article 8 The scope of the income categories described in Article 2 of the Tax Law shall be as follows:
1. "Wage and salary income" means wages, salaries, bonuses, year-end bonuses, profit shares, subsidies, allowances earned by individuals by virtue of the holding of any office or employment and other income earned by individuals relating to the holding of any office or employment.
2. "Income derived by individual businesses from production and operating activities" means:
(1) Income derived by individual businesses from engaging in industrial activities, the handicraft industry, the construction industry, the transport industry, commercial activities, the food and beverage industry, the service industry, the repair industry and production and operating activities in other industries;
(2) Income derived by individuals from engaging in the provision of educational, medical, advisory and other service activities for consideration, with approval from the relevant government authorities and after having obtained the required licenses;
(3) Other income derived by individuals from engaging in individual industrial and commercial production and operating activities; and
(4) All taxable income relating to the production and operating activities of the above individual businesses and individuals.
3. "Income derived from contracting for or leasing the operations of any enterprise or institution" means income derived by individuals from contracting for or leasing operations, or from assigning such contracts or leases, including income of a wage or salary nature derived by individuals on a monthly basis or from time to time.
4. "Income from remuneration for personal services" means income derived by individuals from engaging in design, decoration, installation, drafting, laboratory testing, other testing, medical treatment, legal, accounting, advisory, lecturing, news, broadcasting, translation, proofreading, painting and calligraphic, carving, film and television, sound recording, video recording, show and concert, performance, advertising, exhibition and technical services, introduction services, brokerage services, agency services and other personal services.
5. "Income from author's remuneration" means income derived by individuals by virtue of the publication of their works in books, newspapers and periodicals.
6. "Royalty income" means income derived by individuals from granting the right to use patents, trademarks, copyrights, non-patented technology and other licensing rights. Income derived from granting the right to use copyrights shall not include income from author's remuneration.
7. "Interest, dividend and special dividend income" means income from interest, dividends and special dividends derived by individuals by virtue of their ownership of creditor's rights and share rights.
8. "Income from the leasing of property" means income derived by individuals from the leasing of building and other structures, land use rights, machinery, equipment, means of transportation and other property.
9. "Income from the assignment of property" means income derived by individuals from the assignment of negotiable securities, share rights, buildings and other structures, land use rights, machinery, equipment, means of transportation and other property.
10. "Casual income" means income derived by individuals from winning awards, prizes and lotteries and other income of an occasional nature.
Decisions on income derived by individuals for which the taxable category is not easily determined shall be made by the tax authorities.


Article 9 Measures for the levying and collection of individual income tax on income from share trading shall be separately formulated by the Ministry of Finance and submitted to the State Council for approval and implementation.

Article 10 Individual income includes cash, physical objects, negotiable securities and any other forms of economic interests. Where income takes the form of a physical object, taxable income shall be calculated according to the price specified on the receipt obtained; where there is no receipt for the physical object or where the price specified on the receipt is clearly marked down, the taxable income shall be determined by reference to the local market price. Where income takes the form of a negotiable security, taxable income shall be determined by face value and market price. Where income takes the form of any other economic interest, taxable income shall be determined by market price.

Article 11 For the purpose of item 4 of Article 3 of the Tax Law, the phrase "any individual payment received as income by way of remuneration for personal services that is abnormally high" means any payment received as remuneration for personal services in an amount exceeding CNY20,000 and that is taxable income.
That part of taxable income described in the preceding paragraph that exceeds CNY20,000 but does not exceed CNY50,000 shall, after the amount of tax payable has been calculated in accordance with the Tax Law, be subject to an additional levy at the rate of 50% of the amount of tax payable. That part that exceeds CNY50,000 shall be subject to an additional levy at the rate of 100%.

Article 12 For the purpose of item 2 of Article 4 of the Tax Law, "interest on national debt obligations" means interest income derived by individuals by virtue of holding bonds issued by the Ministry of Finance of the People's Republic of China, and "interest on financial bonds issued by the state" means interest income derived by individuals by virtue of holding financial bonds issued with State Council approval.

Article 13 For the purpose of item 3 of Article 4 of the Tax Law, "allowances and subsidies paid in accordance with uniform state regulations" means special government subsidies and subsidies for members and senior members of academies paid in accordance with State Council regulations, as well as other allowances and subsidies that are exempted from individual income tax by State Council regulations.

Article 14 For the purpose of item 4 of Article 4 of the Tax Law, "welfare benefits" means cost-of-living subsidies paid to individuals in accordance with relevant state regulations out of welfare benefits or labor union funds allocated by enterprises, institutions, state authorities and social organizations, and "relief payments" means hardship subsidies paid to individuals by civil affairs authorities of the state.

Article 15 For the purpose of item 8 of Article 4 of the Tax Law, "income of diplomatic agents, consular officials and other employees of all countries' embassies and consulates located in China, where tax-exempt under relevant Chinese laws" means income that is tax-exempt under the Regulations of the People's Republic of China Concerning Diplomatic Privileges and Immunities or the Regulations of the People's Republic of China Concerning Consular Privileges and Immunities.

Article 16 The ranges and periods of the individual income tax concessions referred to in Article 5 of the Tax Law shall be set by the People's Governments of the provinces, autonomous regions and municipalities directly under the Central Government.

Article 17 For the purpose of item 2 of the first paragraph of Article 6 of the Tax Law, "costs and expenses" means all direct expenses and indirect expenses allocated as costs, as well as sales expenses, administrative expenses and financial expenses incurred by taxpayers while engaging in production and business activities, and "losses" means all non-operating expenses incurred by taxpayers in the course of production and business activities.
Where a taxpayer who engages in production or business activities fails to provide complete and accurate tax information and is unable to calculate his taxable income accurately, his taxable income shall be determined by the competent tax authority.

Article 18 For the purpose of item 3 of the first paragraph of Article 6 of the Tax Law, "gross income of each tax year" means profits obtained by taxpayers pursuant to their agreements on contracted or leased operation, and their income from wages and salaries; and "deduction of necessary expenses" means the monthly deduction of CNY3,500.

Article 19 For the purpose of item 5 of the first paragraph of Article 6 of the Tax Law, "the original value of the property" means:
1. In the case of negotiable securities, the price for which they were purchased and associated expenses paid in accordance with regulations at the time of purchase;
2. In the case of buildings and other structures, the construction expenses or purchase price, and other associated expenses;
3. In the case of land use rights, monies paid to acquire the land use rights, land development expenses and other associated expenses;
4. In the case of machinery, equipment, vehicles and vessels, the purchase price, freight costs, installation expenses and other associated expenses; and
5. In the case of other property, the original value shall be determined by reference to the above methods.
Where a taxpayer fails to provide complete and accurate documentation concerning the original value of the property and is unable to calculate the original value of the property in an accurate manner, the original value of the property shall be determined by the competent tax authority.

Article 20 For the purpose of item 5 of the first paragraph of Article 6 of the Tax Law, "reasonable expenses" means associated expenses paid in accordance with regulations at the time of sale.

Article 21 For the purpose of items 4 and 6 of the first paragraph of Article 6 of the Tax Law, "each payment" means:
1. In the case of income from remuneration for personal services, where the income is derived in a lump sum, the amount of that lump sum; and if the income is of a continuing nature and pertains to the same project, the income derived during one month;
2. In the case of income from author's remuneration, the income derived for each instance of publication;
3. In the case of royalty income, the income derived from each instance in which a license is granted;
4. In the case of income from the leasing of property, the income derived during one month;
5. In the case of interest, dividend and special dividend income, the income derived each time interest, dividends or special dividends are paid; and
6. In the case of casual income, each instance in which such income is received.

Article 22 Tax payable on income from the assignment of property shall be calculated on the basis of the proceeds received from a single assignment of property less the original value of the property and reasonable expenses.

Article 23 Where the same item of income is derived by two or more individuals, tax thereon shall be calculated and paid separately on the income derived by each individual after expenses have been deducted in accordance with the Tax Law.

Article 24 For the purpose of the second paragraph of Article 6 of the Tax Law, "income that individuals donate to educational and other public welfare undertakings" refers to the donation by individuals of their income to educational and other public welfare undertakings, and to areas suffering from serious natural disasters or poverty, through social organizations in the People's Republic of China or state authorities.
That part of the amount of donations which does not exceed 30% of the taxable income declared by a taxpayer may be deducted from his taxable income.

Article 25 Basic pension insurance premiums, basic medical insurance premiums, unemployment insurance premiums and housing common reserves paid by work units for individuals and by individuals shall be deducted from the taxable income of taxpayers in accordance with state regulations.

Article 26 For the purpose of the third paragraph of Article 6 of the Tax Law, "wage and salary income derived from sources outside the People's Republic of China" means income from wages and salaries derived from the holding of any office or employment outside the People's Republic of China.

Article 27 For the purpose of the third paragraph of Article 6 of the Tax Law, "additional deductions" means the deduction of the expenses prescribed by Article 29 of these Regulations in addition to the monthly deduction of CNY3,500.

Article 28 For the purpose of the third paragraph of Article 6 of the Tax Law, "the applicable scope of such additional deductions for expenses" means expenses incurred for:
1. Foreign nationals working in foreign-invested enterprises and foreign enterprises in the People's Republic of China;
2. Foreign experts hired to work in enterprises, institutions, social organizations and state authorities in the People's Republic of China;
3. Individuals who are domiciled in the People's Republic of China and derive wage and salary income by virtue of their holding any office or employment outside the People's Republic of China; and
4. Other personnel as determined by the competent finance authority or tax authority of the State Council.

Article 29 The standard for additional deductions as mentioned in Paragraph 3 of Article 6 of the Tax Law is CNY1,300

Article 30 Overseas Chinese and Hong Kong, Macao and Taiwan compatriots shall be treated by reference to Articles 27, 28 and 29 hereof.

Article 31 Individuals who are domiciled in the People's Republic of China, or who are not domiciled but have resided in the People's Republic of China for no less than one year shall calculate the amounts of tax payable for income derived from sources inside and outside the People's Republic of China separately.

Article 32 For the purpose of Article 7 of the Tax Law, "the amount of individual income tax paid outside the People's Republic of China" means the amount of income tax payable, and actually paid, on income derived by a taxpayer from sources outside the People's Republic of China in accordance with the laws of the country or region from which that income was derived.

Article 33 For the purpose of Article 7 of the Tax Law, "the amount of tax payable calculated in accordance with the provisions of the Tax Law" means the amount of tax payable on income derived by a taxpayer from sources outside the People's Republic of China, calculated separately for each different country or region and for each different tax category, in accordance with the standards for the deduction of expenses and the applicable tax rate stipulated in the Tax Law. The sum of the amounts of tax payable in the different tax categories within the same country or region shall be the maximum amount claimed as a deduction for that country or region.
Where the actual amount of individual income tax paid by a taxpayer in a country or region outside the People's Republic of China is less than the maximum amount that can be claimed for deductions for that country or region as calculated in accordance with the provisions of the preceding paragraph, the balance shall be liable to taxation in the People's Republic of China. Where the amount exceeds the maximum amount that can be claimed as a deduction for that country or region, the excess portion may not be deducted from the amount of tax payable for that tax year; however, such excess portion may be deducted retroactively from any unused portion of the maximum amount that can be claimed as a deduction for that country or region in subsequent tax years, up to a maximum period of five years.

Article 34 When a taxpayer applies for approval to deduct any amount of individual income tax paid outside the People's Republic of China in accordance with Article 7 of the Tax Law, he shall provide the original tax payment receipt issued by the tax authority outside the People's Republic of China.

Article 35 When withholding agents make taxable payments to individuals, they shall withhold tax in accordance with the Tax Law, pay the tax over to the treasury in a timely manner, and keep special records for future inspection.
For the purpose of the preceding paragraph, "payments" shall include payments made in cash, payments by remittance, payments by account transfer, and payments in the form of negotiable securities, physical objects and other forms.

Article 36 Where any of the following circumstances apply to a taxpayer, he shall file a tax return with the competent tax authority in accordance with applicable provisions:
1. Where his annual income is CNY120,000 or more;
2. Where he receives wage and salary income from two or more sources within the territory of China;
3. Where he receives income from outside the territory of China;
4. Where he receives taxable income and does not have a tax withholding agent; or
5. In any other circumstances stipulated by the State Council.
Taxpayers with an annual income of CNY120,000 or more shall file a tax return with the competent tax authority within three months of the end of the year.
The administrative procedures for the locations at which taxpayers file tax returns and other relevant matters shall be formulated by the State Administration of Taxation.

Article 37 "Filing of tax returns for all persons and all amounts" as used in Article 8 of the Tax Law means that the withholding agent submits basic information on the income paid to, specific amounts and total amounts of tax withheld for and other tax-related information relating to individuals on whose behalf he withholds income tax to the competent tax authority before the end of the following month.
The administrative procedures for the filing of tax returns for all persons and all amounts shall be formulated by the State Administration of Taxation.

Article 38 When taxpayers who personally file tax returns file their returns, tax payments that have been withheld inside the People's Republic of China may be deducted from the amount of tax payable in accordance with applicable regulations.

Article 39 Taxpayers who concurrently derive income under two or more of the categories listed in Article 2 of the Tax Law shall calculate and pay tax separately for each category. Taxpayers who derive income under items 1, 2 and 3 of Article 2 of the Tax Law from two or more places inside the People's Republic of China shall combine income in the same category when calculating and paying tax.

Article 40 "Specific industries" as used in the second paragraph of Article 9 of the Tax Law refers to the mining industry, the marine transportation industry, the deep-sea fishing industry and other industries as determined by the competent finance authority or tax authority of the State Council.

Article 41 For the purpose of the second paragraph of Article 9 of the Tax Law, "the calculation method of annual calculation, monthly provisional payments" means the monthly provisional payments of tax payable on wage and salary income for staff and workers in the specific industries listed in Article 38 hereof, and the calculation of the actual tax payment due, within 30 days of the last day of the year, by averaging over 12 months total wage and salary income for the whole year, at which time any excess payment shall be refunded and any shortfall made good.

Article 42 For the purpose of the fourth paragraph of Article 9 of the Tax Law, the phrase "taxpayers shall pay such tax into the national treasury within 30 days of the end of the year" means that taxpayers who derive their income from contracting for or leasing the operation of enterprises in a lump sum payment at the end of the year shall pay tax payable thereon into the national treasury within 30 days of the date on which the income is derived.

Article 43 In accordance with Article 10 of the Tax Law, for the calculation of taxable income, foreign currency income shall be converted into renminbi at the exchange rate published by the People's Bank of China on the last day of the month preceding that in which the tax payment receipt is issued. At the time of the post year-end annual settlement carried out in accordance with the Tax Law, no additional conversion shall be carried out for foreign currency income on which tax has been paid on a provisional basis either monthly or each time such income was derived. For that portion of income on which tax remains payable, taxable income shall be calculated by converting the amount into renminbi at the exchange rate published by the People's Bank of China on the last day of the preceding tax year.

Article 44 When a tax authority pays commissions to a withholding agent in accordance with Article 11 of the Tax Law, it shall issue monthly income return statements to the withholding agent, on the strength of which the withholding agent shall handle treasury refund procedures via a designated bank.

Article 45 The formats for individual income tax returns, individual income tax withholding returns and individual income tax payment receipts shall be formulated by the State Administration of Taxation in a unified manner.

Article 46 For the purpose of the Tax Law and these Regulations, "tax year" means the period commencing on 1 January and ending on 31 December of the Gregorian calendar.

Article 47 Commencing with the 1994 tax year, individual income tax shall be calculated, levied and collected in accordance with the Tax Law and these Regulations.

Article 48 These Regulations shall come into force as of the date issue hereof. The Provisional Regulations of the State Council on Individual Income Tax Concessions for Wage and Salary Income Derived by Foreign Personnel Working in China, which were issued by the State Council on August 8, 1987, shall be repealed simultaneously.