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

Order of the President No.48

June 30, 2011

(Adopted by the 3rd Session of the Fifth National People's Congress on September 10, 1980;
amended for the first time in accordance with the Decision on Amending the Individual Income Tax Law of the People's Republic of China adopted at the 4th Session of the Standing Committee of the Eighth National People's Congress on October 31, 1993;
amended for the second time in accordance with the Decision on Amending the Individual Income Tax Law of the People's Republic of China adopted at the 11th Session of the Standing Committee of the 9th National People's Congress on August 30, 1999;
amended for the third time in accordance with the Decision on Amending the Individual Income Tax Law of the People's Republic of China adopted at the 18th Session of the Standing Committee of the Tenth National People's Congress on October 27, 2005;
amended for the fourth time in accordance with the Decision on Amending the Individual Income Tax Law of the People's Republic of China adopted at the 28th Session of the Standing Committee of the 10th National People's Congress on June 29, 2007;
amended for the fifth time in accordance with the Decision on Amending the Individual Income Tax Law of the People's Republic of China adopted at the 31st Session of the Standing Committee of the 10th National People's Congress on December 29, 2007;
amended for the sixth time in accordance with the Decision on Amending the Individual Income Tax Law of the People's Republic of China adopted at the 31st Session of the Standing Committee of the 10th National People's Congress on June 30, 2011.)

Article 1 Any individual who has a domicile within the territory of China or who has no domicile but has stayed in the territory of China for one year or longer shall pay individual income tax for any income obtained in and outside the territory of China according to the provisions of this Law.
Any individual who has no domicile and does not stay within the territory of China or who has no domicile but has stayed within the territory of China for less than one year shall pay individual income tax for any income obtained within the territory of China according to the provisions of this Law.


Article 2 Individual incomes set forth below shall be subject to individual income tax:
1. wages and salaries;
2. income of individually-owned business from production and business operations;
3. income of enterprises or public-sector organizations from contracting or leasing;
4. labor remuneration;
5. author remuneration;
6. royalties;
7. interests, dividends and bonuses;
8. income from leasing of property;
9. income from transfer of property;
10. fortuitous income; and
11. any other types of income specified as taxable by the financial department of the State Council.


Article 3 Individual income tax rates:
1. For wages and salaries, progressive tax rates ranging from 3 % to 45 % shall apply (see the attached tax rate schedule)
2. For income of individually-owned businesses from production and business operations and income of enterprises and public-sector organizations from contracting or leasing, progressive tax rates ranging from 5 % to 35 % shall apply (see the attached tax rate schedule).
3. For author remuneration, the flat tax rate of 20% shall apply and a 30 % tax deduction shall apply to the payable tax amount.
4. For labor remuneration, the flat tax rate of 20% shall apply. If a single payment of labor remuneration is excessively high, an additional proportion of tax may be levied thereon, with the specific measures to be formulated by the State Council.
5. For royalties, interests, dividends, bonuses, income from leasing of properties, income from transfer of properties, fortuitous income and other types of income, the flat tax rate of 20 % shall apply.


Article 4 Individual incomes set forth below shall be exempt from individual income tax:
1. prizes in science, education, technology, culture, health, sports and environmental protection awarded by provincial people's governments, ministries and commissions under the State Council and units of the People's Liberation Army at or above the army level, as well as by foreign organizations and international organizations;
2. interest accruing from treasury bonds and financial bonds issued by the State;
3. subsidies and allowances distributed according to the unified regulations of the State;
4. welfare benefits, pensions for the disabled or for the family of the deceased and relief payment;
5. insurance compensation;
6. military severance pay and demobilization pay for military personnel;
7. settling-in allowance, severance pay, retirement wages, retirement wages for veteran cadres, and living allowances and subsidies for retired veteran cadres distributed to cadres and workers according to the unified regulations of the State;
8. incomes of diplomatic representatives, consular officers and other personnel of foreign embassies and consulates in China, which, pursuant to the provisions of relevant laws of China, shall be exempt from tax;
9. incomes which shall be exempt from tax under the international conventions to which the Chinese Government is a member or agreements which the Chinese Government has signed; and
10. incomes which are approved to be exempt from tax by the department of the State Council for finance.


Article 5 Upon approval, individual income tax may be reduced under any of the following circumstances:
1. incomes of the disabled, the widowed lonely old people and the families of martyrs;
2. those suffering heavy losses caused by serious natural calamities; or
3. other tax reductions approved by the department of the State Council for finance.

Article 6 Calculation of income amount taxable:
1. for income from wages and salaries, the balance after deducting CNY 3, 500 from the monthly revenue shall be the taxable income.
2. for incomes of private industrial and commercial households from their productions and business operations, the income amount taxable shall be the remainder after deducting costs, expenses and losses from the gross incomes in a tax year.
3. for incomes from contracting or leasing enterprises and institutions, the income amount taxable shall be the remainder after deducting necessary expenses from the gross income in a tax year.
4. for incomes from remuneration for labor services, incomes from author's remuneration, incomes from royalties and incomes from lease of property, the income amount taxable shall be the remainder after deducting CNY 800 if a single payment does not exceed CNY 4,000; and be the remainder after deducting 20 percent for expenses if a single payment exceeds CNY 4,000.
5. for incomes from transfer of property, the income amount taxable shall be the remainder after deducting the original value of the property and reasonable expenses from proceeds of the transfer of property.
6. for incomes from interest, stocks dividends and bonuses, occasional incomes and other incomes, the income amount taxable shall be the amount of income received each time.
The part of income donated by the individuals into education and other public welfare causes shall be deducted from the income amount taxable in accordance with the relevant regulations of the State Council.
For a taxpayer who has no domicile in the territory of China but has obtained incomes from wages and salaries in the territory of China, or for a taxpayer who has a domicile in the territory of China but has obtained wage and salary incomes from abroad, an additional deduction for expenses may be determined according to his average income level, living standard and the change of exchange rates, and the scope and standard for the additional deduction for expenses shall be provided for by the State Council.


Article 7 For a taxpayer who has obtained incomes outside the territory of China, the amount of individual income tax already paid outside China by him may be deducted from the tax amount payable. Nevertheless, the amount so deducted may not exceed the tax amount payable for the taxpayer's incomes from abroad as calculated according to the provisions of this Law.

Article 8 The income earner shall be the taxpayer of individual income tax and the unit or person that effects the payment shall be the withholding agent. Where the individual income exceeds the amount as prescribed by the State Council, where a taxpayer has wage or salary incomes from two or more places or has no withholding agent, or where there is any other circumstance as prescribed by the State Council, the taxpayer shall handle the tax payment declaration according to the provisions of the state. A withholding agent shall, according to the provisions of the state, make the withholding declaration for all the taxpayers and in full amount.


Article 9 Within the first fifteen days of the following month, all tax amounts withheld each month by the withholding agents and all tax amounts paid each month by the taxpayers who file tax returns themselves shall be turned into the State treasury and tax returns shall be submitted to the tax authorities.
For incomes from wages and salaries, the tax amount payable shall be computed and collected on a monthly basis, and the withholding agents or taxpayers shall, within the first seven days of the following month, turn them into the State treasury and submit tax returns to the tax authorities. For incomes from wages and salaries in some specific industries, the tax amount payable may be computed on a yearly basis and be prepaid on a monthly basis, and the concrete measures shall be provided for by the State Council.
For incomes of private industrial and commercial households from their productions and business operations, the tax amount payable shall be computed on a yearly basis and be prepaid on a monthly basis, the taxpayers shall make such prepayments within the first seven days of the following month and shall settle it within three months following the end of a year, and the amount in excess shall be refunded and any amount in deficiency shall be made up.
For incomes from contracting or leasing enterprises and institutions, the tax amount payable shall be computed on a yearly basis, and the taxpayers shall, within 30 days following the end of a year, turn them into the State treasury and submit tax returns to the tax authorities. In case where a taxpayer receives incomes in separate installments within a year from contracted or leased operations, prepayment shall be made within the first seven days following receipt of each installment of income, and the tax amount payable shall be settled within three months following the end of a year, and the amount in excess shall be refunded and any amount in deficiency shall be made up.
A taxpayer who has incomes outside the territory of China shall, within 30 days following the end of a year, turn the tax amount payable into the State treasury and submit the tax return to the tax authority.

Article 10 Renminbi shall be the unit for calculation of all types of incomes. If incomes are in foreign currencies, they shall be converted into Renminbi according to the foreign exchange rates quoted by the State administration of foreign exchanges for tax payment.

Article 11 A service fee equivalent to 2 percent of the amount of tax withheld shall be paid to the withholding agent.

Article 12 The detailed procedures for collection, deduction and exemption on the individual income tax earned on the interests of saving deposits shall be stipulated by the State Council.

Article 13 The administration of individual income tax collection shall be governed by the provisions of the Law of the People's Republic of China on the Administration of Tax Collection.

Article 14 The State Council shall, pursuant to the provisions of this Law, formulate the regulation for its implementation.

Article 15 This Law shall enter into force on the day of its promulgation.