The Measures for the Implementation of Collection of Individual Income Tax (Revised in 2007)

Order of the State Council of the People's Republic of China [2007] No. 502

July 20, 2007

(Published in the No. 272 Order of the State Council of the People's Republic of China on September 30, 1999 and amended in accordance with the Decision of the State Council on Amending the Measures for the Implementation of Collection of Individual Income Tax on Interest published in the No. 502 Order of the State Council of the People's Republic of China on July 20, 2007)

Article 1 The Measures are stipulated in accordance with the requirements of Article 12 of the Law of the People's Republic of China on Individual Income Tax.

Article 2 Individuals that earn the interest of saving deposits of RMB or foreign currencies from savings institutions within the territory of the People's Republic of China should pay the individual income tax in accordance with the Measures.

Article 3 The basis for calculating the individual income tax on interest income should be the interest income of RMB or foreign currencies deposits of tax payers.

Article 4 The individual income tax on interest income should be collected with a reduced tax rate of 5%. The adjustment scope of the reduction should be decided by the State Council.

Article 5 Individual income tax should be exempted for interest income of individual education savings deposits and interest of other special savings deposits or savings deposits of special mutual funds that are recognized by the State Council.
The education savings deposits mentioned in the foregoing clause refer to the designated savings deposits, the accounts of which are opened by individuals in accordance with relevant national regulations in the appointed banks and deposited with funds in the required amount for the purpose of education.

Article 6 For interests of savings deposits, the individual income tax should be levied upon the interest earned each time.

Article 7 To collect the individual income tax on interests of savings deposits, the savings institutions that pay the interests should be the tax withholding agents, executing withholding and paying duties.

Article 8 Tax withholding agents should withhold tax when paying the payable interests to their customers.
The payable interests mentioned in foregoing clause include the interests paid when customers withdraw from the bank, the interests due on the date of accrual for savings deposits, and the interests payable for the time of saving optional deposits.
Tax withholding agents should itemize the withheld tax on the receipts of payable interests issued to the customers.

Article 9 The tax that is withheld by the tax withholding agents in each month should be submitted to the national treasury within seven days at the beginning of the next month, and submit reports of listings of withheld tax to the local tax bureaus; if the withheld tax is in foreign currency, it should be converted into RMB and submitted to the national treasury.

Article 10 Tax withholding agents should be paid with a handling fee of 2% of the withheld tax.

Article 11 The tax bureaus should enhance the supervision and examination of the conditions of withholding tax by the tax withholding agents, with which the tax withholding agents should be cooperative, truly report the situation, should not refuse to provide or conceal relevant materials.

Article 12 The individual income tax levied on the interest of savings deposits should be collected and administrated by the National Tax Bureau in accordance with the Law of the People's Republic of China on the Administration of Tax Levying, Law of the People's Republic of China on Individual Income Tax, and the present Measures.

Article 13 The savings institutions that are mentioned in these Measures refer to the commercial banks, city credit cooperatives, rural credit cooperatives and other financial institutions that are approved by the banking regulatory institutions of the State Council to accept personal deposits from the public.

Article 14 The interests of savings deposits generated before October 31, 1999 will not be imposed the individual income tax; the interest of savings deposits generated between November 1, 1999 and August 14, 2007 will be imposed the individual income tax with a 20% tax rate; the interest of savings deposits generated after August 15, 2007 will be imposed the individual income tax with a 5% tax rate.

Article 15 These Measures shall go into effect as of November 1, 1999.