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GUO WU YUAN LING [142] 1994.1.28
Article 1 These Rules are formulated in accordance with the Individual
Income Tax Law of the People's Republic of China (hereinafter referred
to the "Tax Law").
Article 2 "Individuals who have domicile in China" in
Paragraph 1 of Article 1 of the Tax Law, refers to individuals who
by reason of their permanent registered address, 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, the term "have resided for one year or more
in China" means to have resided within the People's Republic
of China for 365 days in a Tax Year. No deductions shall be made
from that number of days for temporary trips out of the People's
Republic of China.
For the purposes of preceding paragraph, the term "Temporary
Trips out of the People's Republic of China" means absence
from the People's Republic of China for not more than 30 days during
a single trip, or not more than a cumulative total of 90 days over
a number of trips, within the same Tax Year.
Article 4 "Income derived from sources within China"
of Paragraphs 1 and 2 of Article 1 of the Tax Law, refers to income
of which the source is inside the People's Republic of China, and
the term "from sources outside China" means income of
which the source is outside the People's Republic of China.
Article 5 The following income, whether the place of payment is
inside the People's Republic of China or not, shall be income derived
from sources inside the People's Republic of China.
A. income from personal services provided inside the People's Republic
of China because of the tenure of an office, employment, the performance
of a contract, etc.;
B. income from the lease of property to a lessee for use inside
the People's Republic of China;
C. income from the assignment of property such as buildings, land
use rights, etc. inside the People's Republic of China or the assignment
inside the People's Republic of China of any other property;
D. income from the licensing for use inside the People's Republic
of China of any kind of licensing rights;
E. income from interest, dividends and extra dividends derived
from companies, enterprises and other economic organizations or
individuals inside the People's Republic of China.
Article 6 For income derived from sources outside the People's
Republic of China of individuals not domiciled in the People's Republic
of China, but resident for more than one year and less than five
years, subject to the approval of the tax authorities-in-charge,
individual income tax may be paid on only that part which was paid
by companies, enterprises or other economic organizations or individuals
which are inside the People's Republic of China. Individuals who
reside for more than five years shall, commencing from the sixth
year, pay individual income tax on the whole amount of income derived
from sources outside the People's Republic of China.
Article 7 For individuals who are not domiciled in the People's
Republic of China, but who reside inside the People's Republic of
China consecutively or accumulatively for not more than 90 days
in any one Tax Year, their income derived from sources inside the
People's Republic of China which is paid by an employer outside
the People's Republic of China, and which is not borne by the employer's
establishment or business place within the People's Republic of
China, shall be exempt from individual income tax.
Article 8 The scope of the categories of income mentioned in Article
2 of the Tax Law shall be as set forth below.
A. The term "income from wages and salaries" refers to
wages, salaries, bonuses, year-end extras, profit shares, subsidies,
allowances and other income related to the tenure of an office or
employment that is derived by individuals by virtue of the tenure
of an office or employment.
B. The term "income from production or business operation
derived by individual industrial and commercial households"
shall mean the following:
a. income derived by individual industrial and commercial households
from engagement in industry, handicrafts, construction, transportation,
commerce, the food and beverage industry, the service industry,
the repair industry and production and business in other industries;
b. income derived by individuals from engagement, with approval
from the relevant government authorities and after having obtained
licenses, in the provision of educational. medical, advisory and
other services activities for consideration;
c. other income derived by individuals from engagement in individual
industrial and commercial production and business;
d. all taxable income related to production and business of the
above individual industrial and commercial households and individuals.
C. "Income from contracted or leased operation of enterprises
or institutions" refers to income derived by individuals from
contracted or leased 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.
D. "Income from remuneration for personal services" refers
to income derived by individuals from engagement in design, decoration,
installation, drafting, laboratory testing, other testing, medical
treatment, legal accounting, advisory, lecturing, news, broadcasting,
translation, proofreading, painting and calligraphic, carving, moving
picture and television, sound recording, video recording, show,
performance, advertising, exhibition and technical services, introduction
services, brokerage services, agency services and other personal
services.
E. "Income from author's remuneration" refers to income
derived by individuals by virtue of the publication of their works
in books, newspapers and periodicals.
F. "Income from royalties" refers to income derived by
individuals from provision of the right to use patent rights, trademark
rights, copyrights, non-patented technology and other licensing
rights. Income from provision of the fight to use copyrights shall
not include income from author's remuneration.
G. "Income from interest, dividends and extra dividends"
refers to income from interest, dividends and extra dividends that
is derived by individuals by virtue of their possession of creditor's
rights and share rights.
H. "Income from lease of property" refers to income derived
by individuals from the lease of buildings, land use rights, machinery,
equipment, means of transportation and other property.
I. "Income from transfer of properly" refers to income
derived by individuals from the assignment of negotiable securities,
share rights, structures, land use rights, machinery, equipment,
means of transportation and other property.
J. "Contingent income" refers to income derived by individuals
from winning awards, prizes and lotteries and other income of an
occasional nature.
Income derived by individuals for which the taxable category is
difficult to determine shall be decided upon by the tax authorities-in-charge.
Article 9 Measures for the levy and collection if individual income
tax on income from the transfer of shares shall be separately formulated
by the Ministry of Finance and implemented upon approval by the
State Council.
Article 10 Taxable income derived by individuals shall include
cash, physical objects and negotiable securities. If the income
is in the form of physical objects, the amount of taxable income
shall be determined according to the price specified on the voucher
obtained. If there is no receipt for the physical objects or if
the price specified on the voucher is obviously on the low side,
the tax authorities-in-charge shall determine the amount of taxable
income by reference to the local market price. If the income is
in the form of negotiable securities, the amount of taxable income
shall be determined by the tax authorities-in-charge according to
the face value and the market price.
Article 11 For the purposes of item (4) of Article 3 of the Tax
Law, the phrase "a specific payment of income from remuneration
for personal service is excessively high" shall mean a payment
received as remuneration for personal service with an amount of
taxable income exceeding RMB 20000.
That part of taxable income as mentioned in the preceding paragraph
which exceeds RMB 20000 but does not exceed RMB 50000 shall, after
the amount of tax payable is 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 which exceeds RMB 50000 shall be
subject to an additional levy at the rate of 100 % of tax payable.
Article 12 "Interest on national debt obligations" of
item (2) of Article 4 of the Tax Law refers to interest income received
by individuals by virtue of holding bonds issued by the Ministry
of Finance of the People's Republic of China, and the term "interest
on financial debentures issued by the State" refers to interest
income derived by individuals by virtue of holding financial bonds
issued with State Council approval.
Article 13 "Subsidies and allowances paid in accordance with
uniform regulations of the state" in item (3) of Article 4
of the Tax Law refers to special government subsidies issued in
accordance with State Council regulations and allowances and subsidies
that are exempt from individual income tax by State Council regulations.
Article 14 "Welfare benefits" of item (4) of Article
4 of the Tax Law refers to cost-of-living subsidies paid to individuals
according to relevant state regulations out of the welfare benefits
or labor union funds allocated by enterprises, institutions, government
agencies and social organizations, and the term "relief payments"
means hardship subsidies paid to individuals by civil affairs authorities
of the state.
Article 15 For the purposes of item (8) of Article 4 of the Tax
Law, the "income derived by the diplomatic agents, consular
officers and other personnel who are exempt from tax under the provisions
of the relevant Laws of China" refers to income that is tax-exempt
under the Regulations of the People's Republic of China Concerning
Diplomatic Privileges and Immunities and the Regulations of the
People's Republic of China concerning Consular Privileges and Immunities.
Article 16 The ranges and periods of the reductions in individual
income tax referred to in Article 5 of the Tax Law shall be stipulated
by the People's Governments of the provinces, autonomous regions
and municipalities directly under the Central Government.
Article 17 For the purposes of item (2) of the first paragraph
of Article 6 of the Tax Law, the terms "costs" and "expenses"
mean all direct expenditures, indirect expenses allocated as costs,
as well as marketing expenses, administrative expenses and financial
expenses incurred by taxpayers while engaging in production and
business, and the term "losses" means all non-operating
expenditures incurred by taxpayers in the course of production and
business.
If a taxpayer engaging in production or business fails to provide
complete and accurate tax information and is unable to correctly
calculate the amount of taxable income, his amount of taxable income
shall be determined by the tax authorities-in-charge.
Article 18 For the purposes of item (3) of the first paragraph
of Article 6 of the Tax Law, the term "the gross income in
a tax year" means the share of the operating profit or the
income of a wage or salary nature derived by the taxpayer according
to the contract for the contracted or leased operation and the term
"deduction of necessary expenses" means a monthly deduction
of RMB 800.
Article 19 For the purposes of item (5) of the first paragraph
of Article 6 of the Tax Law, the term "the original value of
the property" means:
A. in the case of negotiable securities, the price for which they
were purchased and related expenses paid according to regulations
at the time of purchase;
B. in the case of buildings, the construction expenses or purchase
price, and other related expenses;
C. in the case of land use rights, amount paid to acquire the land
use rights, land development expenses and other related expenses;
D. in the case of machinery, equipment, vehicles and vessels, the
purchase, freight, installation expenses and other related expenses;
E. in the case of other property, the original value shall be determined
by reference of the above methods.
If a taxpayer fails to provide complete and accurate vouchers concerning
the original value of the property and is unable to correctly calculate
the original value of the property, the original value of the property
shall be determined by the tax authorities-in-charge.
Article 20 For the purposes of item (5) of the first paragraph of
Article 6 of the Tax Law, the term "reasonable expenses"
means relevant expenses paid in accordance with regulations at the
time of sale.
Article 21 "Each payment" of items (4) and (6) of the
first paragraph of Article 6 of the Tax Law refers to:
A. in the case of income from remuneration for personal services,
the total amount if the income is taken as a lump sum; if the income
is taken over a period of time and relates to the same project,
the income received during one month;
B. in the case of income from author's remuneration, the income
received for each publication;
C. in the case of income from royalties, the income received for
each instance of licensing a right;
D. in the ease of income from the lease of property, the income
received during one month;
E. in the case of income from interest, dividends and extra dividends,
the income derived each time interest, dividends or extra dividends
are paid;
F. in the case of contingent income, each payment of such income
received.
Article 22 Tax on income from the assignment of property shall
be calculated and paid on the proceeds of a single assignment of
property less the original value of the property and reasonable
expenses.
Article 23 If 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 the deduction of
expenses respectively in accordance with the Tax Law.
Article 24 "Individual income donated to educational and other
public welfare undertakings" in Paragraph 2 of Article 6 of
the Tax Law 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 or government agencies in the People's Republic of
China.
That part of the amount of donations which does not exceed 30%
of the amount of taxable income declared by the taxpayer may be
deducted from the amount of taxable income.
Article 25 "Income from wages and salaries from sources outside
China" in Paragraph 3 of Article 6 of the Tax Law refers to
income from wages and salaries derived from the tenure of an office
or employment outside the People's Republic of China.
Article 26 "Additional deductions for expenses" in Paragraph
3 of Article 6 of the Tax Law refers to a monthly deduction for
expenses in the amount specified in Article 28 of these Rules, in
addition to the deduction for expenses of RMB 800.
Article 27 "The scope of applicability of such additional
deductions for expenses" in Paragraph 3 of Article 6 of the
Tax Law means:
A. foreign nationals working in foreign investment enterprises
and foreign enterprises in the People's Republic of China;
B. foreign experts hired to work in enterprises, institutions,
social organizations and government agencies in the People's Republic
of China;
C. individuals who are domiciled in the People's Republic of China
and derive income from wages and salaries by virtue of their tenure
of an office or employment outside the People's Republic of China;
and
D. other personal as determined by the Ministry of Finance.
Article 28 The standard for the additional deductions for expenses
mentioned in Paragraph 3 of Article 6 of the Tax Law shall be RMB
3200.
Article 29 Overseas Chinese and Hong Kong, Macao and Taiwan compatriots
shall be treated by reference to Article 26, 27 and 28 of these
Rules.
Article 30 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 at least one year shall calculate the amounts
of tax payable for income derived from sources within and outside
the People's Republic of China separately.
Article 31 "Income tax paid to foreign authorities" in
Article 7 of the Tax Law refers to the amount of income tax payable,
and actually paid, on income derived by a taxpayer from sources
outside the People's Republic of China, according to the laws of
the country or region from which that income was derived.
Article 32 "The amount of tax otherwise payable under this
Law" in Article 7 of the Tax Law refers to 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 income category, in accordance
with the standards for the deduction of expenses and the applicable
tax rates stipulated in the Tax Law. The sum of the amounts of tax
payable in the different income categories within the same country
or region shall be the limit for deductions for that country or
region.
If 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 limit for deductions for that country or region computed
in accordance with the provisions of the preceding paragraph, the
balance shall be paid in the People's Republic of China. If the
amount exceeds the limit for deductions for that country or areas,
the excess portion may not be deducted from the amount of tax payable
for that Tax Year; however, such excess portion may be deducted
from any unused portion of the limit for deductions for that country
or region during subsequent Tax Years, for a maximum period of five
years.
Article 33 When taxpayers apply for approval to deduct the amounts
of individual income tax paid outside the People's Republic of China
in accordance with Article 7 of the Tax Law, they shall provide
the original tax payment receipts issued by the tax authorities
outside the People's Republic of China.
Article 34 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 purposes of the preceding paragraph, the term "payments"
shall include payments in cash, payments by remittance, payments
by account transfer, and payments in the form of negotiable securities,
physical objects and other forms.
Article 35 Taxpayers who personally file tax returns shall file
the returns with and pay tax to the tax authorities-in-charge of
the place where their income is derived. Taxpayers who derive income
from sources outside the People's Republic of China, or who derive
income in two or more places inside the People's Republic of China,
may select one place in which to file tax returns and pay tax. Taxpayers
who wish to change the location in which they file tax returns and
pay tax shall obtain the approval of the original responsible tax
authorities.
Article 36 When taxpayers personally file their tax returns, they
shall deduct from the amount of tax payable the tax payments that
have been withheld inside the People's Republic of China in accordance
with relevant regulations.
Article 37 Taxpayers who concurrently derive income under two or
more of the categories listed in Article 2 of the Tax Law shall
calcualte and pay tax separately for each category. Taxpayers who
derive income under items (1), (2) or (3) of Article 2 of the Tax
Law in two or more places inside the People's Republic of China
shall combine the income under the same category for the computation
and payment of tax.
Article 38 "Specified industries" in Paragraph 2 of Article
9 of the Tax Law refers to the excavation industry, ocean-shipping
industry, deep sea fishing industry and other industries as determined
by the Ministry of Finance.
Article 39 "Tax computed on an annual basis and paid in advance
in monthly installments" in Paragraph 2 of Article 9 of the
Tax Law refers to the monthly prepayment of the tax payable on the
income from wages and salaries of staff and workers in the specified
industries listed in Article 38 of these Rules, and the actual tax
payment due, within 30 days from the last day of the year, is calculated
by averaging over 12 months the total wages and salary income for
the whole year, at which time excess payments shall be refunded
and deficiencies shall be made good.
Article 40 "The tax shall be paid into the state treasury
within 30 days after the end of each tax year" in Paragraph
4 of Article 9 of the Tax Law meand that taxpayers who derive their
income from contracted or leased operation of enterprises in a lump
sum payment at the end of the year, shall pay the tax payable thereon
into the State treasury within 30 days of the date on which the
income is derived.
Article 41 In accordance with Article 10 of the Tax Law, foreign
currency income shall be converted into Renminbi for the computation
of the amount of taxable income 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 annual settlement after the end of the year in accordance with
the Tax Law, the amounts of foreign currency income on which tax
has been prepaid on a monthly basis or each time the income was
derived shall not be converted again. As for the portion of income
the tax on which is to be made up, the amount of taxable income
shall be calcualted by converting such portion of income into Renminbi
according to the exchange rate published by the People's Bank of
China on the last day of the preceding tax year.
Article 42 When tax authorities pay commissions to withholding agents
in accordance with Article 11 of the Tax Law, they shall issue to
the withholding agents monthly refund certificate, on the strength
of which the withholding agent shall carry out treasury procedures
for receiving payment with designated banks.
Article 43 The models for individual income tax returns, individual
income tax withholding returns and individual income tax payment
receipts shall be uniformly formulated by the State Administration
of Taxation.
Article 44 "Tax Year" in the Tax Law and these Rules
refers to the period commencing on January 1 and ending on December
31 on the Gregorian calendar.
Article 45 Beginning with the 1994 Tax Year, the calculation of
the levy of individual income tax will follow the Tax Law and provisions
in these Regulations.
Article 46 These Regulations are interpreted by the Ministry of
Finance and the State Administration of Taxation.
Article 47 These Regulations take effect on the date of issue.
Annulled at the same time, are "the Provisional Regulations
on Reduction of the Levy of Individual Income Tax on the Wage and
Salary Income of Foreign Nationals Who Come to China to Work, by
the State Council of the People's Republic of China" issued
by the State Council on August 8, 1987.
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