Following completion of public consultation on “Announcement on annual comprehensive income tax reconciliation (consultation document)” (hereinafter referred to as “consultation document”), the State Taxation Administration (“STA”) formally published “Announcement on relevant policies regarding 2019 individual income tax annual comprehensive income tax reconciliation” (hereinafter referred to as "Announcement No. 44"), which clarifies relevant details of the 2019 annual comprehensive income tax reconciliation (hereafter “Annual Reconciliation”).
Announcement 44 has broadly adopted the policies set out in the consultation document (please refer to China Tax Alert Issue 39, 2019), and also introduced the following additions and changes:
Obligations of Withholding Agents
Information reporting and retention
Following the public consultation, Announcement 44 further clarifies the obligations of individual taxpayers and withholding agents. It continues to focus on the traditionally successful strategy of utilising the withholding mechanism, and aims to ease the administrative burdens on individual taxpayers.
In the meantime, while confirming the obligations of withholding agents, Announcement 44 provides that they can also support the taxpayers by way of training and guidance to complete the Annual Reconciliation online filing as well as tax payment or refund process. The tax authorities will also introduce a series of relevant services (including enhancement of policy interpretation and administrative support, providing filing software to withholding agents) in order to reduce the burdens on withholding agents.
As the first Annual Reconciliation under the latest tax reform, it brings challenges to taxpayers and withholding agents. Considering the complex and technical nature of taxation, Announcement 44 also emphasises that Annual Reconciliation can be performed via professional tax advisers. This implies that withholding agents and taxpayers should consider seeking support from professional advisers to ensure that their obligations are fulfilled in a timely manner. Organisations with the following characteristics are advised to contact professional advisers in respect of the 2019 Annual Reconciliation at the earliest opportunity:
We welcome organisations and individuals to contact us to discuss policy developments and practical experiences. We would be glad to share the latest updates and provide you with necessary support.