Individual Income Tax(个人所得税)

Individual Income Tax

(1) Taxpayers

Any individual who has domicile in China or who has no domicile in China but has resided in China for one year or more shall pay Individual Income Tax on his worldwide income. Any individual who is neither domiciled nor resident in China or who has resided in China for less than one year shall pay Individual Income Tax on the income from sources inside China.

(2) Taxable items and calculation of Individual Income Tax payable a. Wages and salaries

Wages and salaries are taxed on the basis of the balance of taxpayer' s monthly wages and salaries after lump-sum deduction of expenses (2000 yuan for mainland citizens, 4800 for foreigners) and by applying the nine-grade progressive rates as shown in the table below.

Individual Income Tax Rates Schedule (1):

Grade	Monthly Taxable Income	Tax Rate (%)	Quick Deduction
1	Income of 500 yuan or less	5	0
2	That part of income in excess of 500 to 2,000 yuan	10	25
3	That part of income in excess of 2,000 to 5,000 yuan	15	125
4	That part of income in excess of 5,000 to 20,000 yuan	20	375
5	That part of income in excess of 20,000 to 40,000 yuan	25	1375
6	That part of income in excess of 40,000 to 60,000 yuan	30	3375
7	That part of income in excess of 60,000 to 80,000 yuan	35	6375
8	That part of income in excess of 80,000 to 100,000 yuan	40	10375
9	That part of income in excess of 100,000 yuan	45	15375

The formula for computing the amount of tax payable is:

Monthly taxable income = Monthly aggregate wages/salaries - 800 yuan Monthly amount of tax payable = Monthly taxable income ×Applicable rate - Quick deduction

The taxpayers who have no domiciles in China but earn wages and salaries from China or who have domiciles in China and earn wages and salaries from outside China may enjoy additional expense deductions (currently 4000 yuan per month) in addition to the regular monthly deduction of 800 yuan in computing the taxable income.

b. Individual household production or business operation income

With respect to the individual household production or business operation income, the amount of tax payable is computed on the basis of the balance of the gross annual production and business operation income after deduction of the related cost, expenses and losses and by applying the five-grade progressive tax rates as listed in the table below.

Individual Income Tax Rates Schedule (2):

Grade	Annual Taxable Income	Tax Rate (%)	Quick Deduction
1	Income of 5,000 yuan or less	5	0
2	That part of income in excess of 5,000 to 10,000 yuan	10	250
3	That part of income in excess of 10,000 to 30,000 yuan	20	1250
4	That part of income in excess of 30,000 to 50,000 yuan	30	4250
5	That part of income over 50,000 yuan	35	6750