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China: Proposed rules for individual income tax, itemized deductions

China: Proposed rules for individual income tax

The Ministry of Finance and State Administration of Taxation on 20 October 2018 released draft rules for implementing individual income tax measures, including provisions relating to the administration of itemized deductions. A public consultation is available for comments up to 4 November 2018.

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According to the drafts (which are subject to change), there are proposed measures concerning:

  • The rules for determining the domicile of foreign individuals and of Chinese persons (a five-year rule would be retained)
  • Rules allowing foreign employees to elect to claim itemized deductions, but not an exemption from tax for certain fringe benefits
  • Definitions of the terms related-party transaction and controlled foreign corporation when involving high net-worth individuals
  • Rules for deemed disposals on foreign immigration of Chinese taxpayers, and thus subject to individual income tax
  • Rules for adequate documentation of items claimed as itemized deductions

 

Read an October 2018 report prepared by the KPMG member firm in China

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