On 31 August 2018, the Standing Committee of the National People’s Congress passed the amendment to reform PRC IIT Law (“the Amendment”). The Amendment was promulgated through the Presidential Decree No. 9, and will take full effect from 1 January 2019. The revised standard personal deduction and tax rates table will apply from 1 October 2018.
In addition to the key amendments which were discussed in Issues 14 and 16 of KPMG's China Tax Alerts issued in June and July 2018 respectively, the following are notable changes which were raised in the second review of the Draft and passed under the new law:
The passing of the Amendment is a significant milestone in the evolution of China’s tax system. Further regulations and guidelines are expected from the State Council in due course.
The following key interest of the practical considerations associated with the new IIT Law are expected to be further addressed in the implementation rules and guidelines:
Individual taxpayers and organisations are recommended to review the implications of the Amendment on their personal tax affairs and company policies concerning employees, focusing on the following areas:
If you have any questions on the above, KPMG will be pleased to assist and provide relevant guidance and assist accordingly.