1.4 INDIVIDUAL INCOME TAX ("IIT")
ISSUES AND CALCULATIONS
1.41 TAXABLE INCOME:
The following items are the examples of taxable income / benefits for foreign
nationals working in PRC ("expatriates"):
Wages and
basic salaries;
Other
benefits and gains in connection with the employment;
Cost of
living and vehicle allowances;
Tax
reimbursements;
Any
compensations for services rendered;
Stock
awards and stock options;
Bonus and
cash allowances;
Occasional
gains;
Any gains
from the transfer of property;
Subsidy;
and
Severance
payments.
1.42 STANDARD
DEDUCTIONS:
RMB4,800
for expatriates at monthly basis;
RMB2,000 for local PRC resident at monthly
basis; and
Approved
charitable donation.
1.43 INDIVIDUAL INCOME TAX RATES AND CALCULATION
FORMULA:
Monthly Taxable Income after
standard deduction (RMB)
Tax Rate (%)
Quick Reckoning
Amount (RMB)
0-500
5
0
501-2,000
10
25
2,001-5,000
15
125
5,001-20,000
20
375
20,001-40,000
25
1,375
40,001-60,000
30
3,375
60,001-80,000
35
6,375
80,001-100,000
40
10,375
Over
100,000
45
15,375
Tax payable =
Taxable Income X Applicable Tax Rate Less Quick Reckoning Amount
1.44 IIT TAX PLANNING SERVICES RENDERED TO
EXPATRIATES WORKING IN PRC
We can provide the tailor-made IIT tax planning services to such expatriates at
the day one before they will start to work in PRC. Please contact us.
2. INDIVIDUAL INCOME
TAX TO THE INDUSTRIAL AND COMMERCIAL INDIVIDUAL BUSINESS UNITS.
The Industrial and Commercial
individual business unit is defined as the business unit which is engaged in
the scope of business including industries, construction, transportation and logistics,
food and beverage and mechanical repairs and services rendered and so on.
The tax is calculated based on
annual basis, it is worked out when the annual turnover or total income of the business
unit less the related costs and expenses incurred, and losses brought forwards
to get the assessable amount.
In the light of the foregoing,
IIT amount is calculated on annual basis and prepaid every month. The taxpayer
has to pay each monthly tax prepayment within 7 days after the preceding month
end.
The table of tax rates adopted
subject to the profit and gain from their business of Industrial and commercial
individual business unit is summarized as follows
