Home Economy China amends individual income tax law

China amends individual income tax law


By Chu Daye, Global Times
the Standing Committee of China’s National People’s Congress on Tuesday, the Xinhua News Agency reported.
The draft amendment raises the minimum threshold for personal income tax from 3,500 yuan (about $544) per month to 5,000 yuan, or 60,000 yuan per year.
The amended law may land very soon, possibly this year, experts predicted.
Besides the threshold change, the new tax scheme will include deductible items including education, medical costs, mortgage loan interest and housing rents.
It would be the 7th amendment since the law was introduced in 1980 when the original threshold for individual income tax exemption was 800 yuan per month, and the amendment will bring sweeping change, Xinhua said. The last threshold raise took place in 2011.
The proposed rise in threshold lies in contrast with earlier media reports, which suggested a threshold set at 7,000 yuan or even 10,000 yuan.
Cong Yi, an economics professor at the Tianjin University of Finance and Economics, said the increase of 1,500 yuan is reasonable, believing gradual change is better.
“The more appropriate pace for adjustment agreed upon by academics is two to three years,” Cong said.
Wang Surong, a professor with University of International Business and Economics, said the goal of 7,000 yuan, which is double the 2011 taxable level, may be shooting too far.
Setting the minimum threshold must be in accordance with overall economic growth and income growth levels, rather than people’s expectation, Wang said.
According to the calculation by Beijing News, a person who earns 10,000 yuan per month will have their income tax payments reduced by 255 yuan per month after the new tax scheme is implemented.
Analysts said that as the amendment has been submitted, the new law could be expected to land soon, possibly within the year or taking effect on the first day of 2019.
Cong said because China’s tax scheme is far from perfect, the change could result in a reduction in individual income tax revenues for tax collectors after the implementation of the amendment. China collected individual income tax worth 1.19 trillion yuan in 2017, up 18.6 percent year-on-year.


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