This report covers the release by the government of the People’s Republic of China of the full text of the draft amendments to the PRC individual income tax (IIT) law and an invitation for public comment which ends 28 July.
On 29 June 2018, the National People’s Congress of the People’s Republic of China (“PRC” or “China”) released the full text of the draft amendments to the PRC individual income tax (“IIT”) law on its official web site. It is seeking consultation from the public, which is due to close on 28 July 2018.1
This consultation, which closes soon, is an opportunity for interested parties to weigh in on the proposed amendments. With changes in determining residence, the tax brackets, what are allowable personal deductions and itemised deductions, the IIT reform will mean significant changes to China’s individual income tax system.
The revised PRC IIT law will take effect 1 January 2019.2 Prior to full implementation, the following will take place:
For the proposed tax rate tables, see the Appendix in “China Seeks Public Consultation on Draft Amendments to the PRC IIT Law,” in China Tax Alert (Issue 16, July 2018), published by the KPMG International member firm in the PRC.
The Draft reaffirmed the requirement to make monthly provisional filings and annual reconciliation filings, and the corresponding timeframe. It also led to questions being raised by the public on whether certain preferential tax treatments under the existing regulations will remain effective after 1 January 2019.
Implementation of the amended PRC IIT Law and roll-out of the accompanying implementation rules could impact the effectiveness of the reform and have an effect on:
We will continue monitoring this situation and endeavour to share our observations on the IIT reform and the associated impact on taxpayers.
The information contained in this newsletter was submitted by the KPMG International member firm in the People’s Republic of China.
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