Tax Grossing up methods of annual one-off bonuses clarified
Tax Grossing up methods of annual one-off bonuses...
China alert - Issue 14, May 2011
The State Administration of Taxation (SAT) issued Announcement 28 to deal with the computation of taxable income for Individual Income Tax (IIT) purposes where employers agree to bear part of the tax liability of employees in respect of their annual one-off bonuses. Announcement 28 will bring greater clarity and certainty to the IIT compliance obligations of both the employers and employees. The principles underlying the calculation methods in Announcement 28 are consistent with those contained in the earlier circulars on the grossing up of salaries and wages in generally i.e. Circular 199. Announcement 28 has taken effect from 1 May 2011.