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Proposed IIT Reform

Geezer (1951 posts) • 0

KPMG is one of the Big Four auditors, along with Deloitte, Ernst & Young (EY), and PricewaterhouseCoopers (PwC).

Seated in the Netherlands, KPMG employs 189,000 people. The name "KPMG" stands for "Klynveld Peat Marwick Goerdeler."

Geezer (1951 posts) • 0

Hope this is helpful, a pdf doc on deductions included in the IIT reform law:

Special Additional Deductions for Individual Income Tax Reform in the PRC

According to the newly revised individual income tax law, for the calculation of taxable income of individual income in the future, besides the RMB5,000 tax exemption allowance and the special deduction such as "five insurances and one fund", six special additional deductions will be added, such as children's education, continuing education, medical treatment for serious diseases, housing loan interest, housing rent and expenditure for elderly dependents.

www.lehmanbrown.com/[...]

JanJal (1179 posts) • 0

The blog article behind first link quotes situation for someone paying 50 000 RMB in monthly rent (etc) in China, which is quite rare in Yunnan.

Still a limit on annual housing deduction at 18 000 RMB would hit us here too. But I think many expats in China (especially teachers) live in housing arranged by their employers, rather than their own tax-deducted apartments.

It's probably been mentioned somewhere, but I haven't found how (for example) married couples are treated with the annual deduction limitations. Will both be allowed full deductions, or will tax authorities start tracking family connections and living arrangements more closely... somehow I don't think that they are up to the task.

Anyway, allowing same deductions for both spouses could serve purposes beyond taxation in this country. Namely getting people married and making babies.

kurtosis (86 posts) • 0

This regulation is a huge blow to the competitiveness of China's costal cities. Are there any comments or reactions by international companies? Or will they simply rent apartments as a company and allow employees to live there for free?
How about international schools?

JanJal (1179 posts) • 0

I don't necessarily think that it is a blow to competitiveness overall, just blow to foreign high-end professionals there.

Remember that these new deductions are now available also to Chinese nationals.

fabey (26 posts) • 0

Just published on SCMP titled: "China’s expat tax system: who pays and how does it work?"

- "Recent plans by Beijing to reform tax exemptions on expatriate employee allowances have thrown the spotlight on China’s tax regime for foreigners"

Link:

www.scmp.com/[...]

"Who needs to pay individual income tax in China?

Chinese law stipulates that individuals who are domiciled in the mainland, or live in the country for a total of 183 days in a tax year, will be categorised as tax residents. However, only after staying in the country for six straight years, without exiting for more than 30 days, will global income be taxed.

Non-residents pay taxes only on the income earned in China.

What kind of income is taxed in China?

The IIT levy is applicable to people earning wages, salaries, pay for authors or personal services, plus income from royalties, business operations, interest, dividends and bonuses. Revenue from property leasing or transactions, as well as contingent income, is also taxed."

7-tier individual income tax rate bracket chart and municipal level tax break info for expats also mentioned in the above article published one hour ago.

"... amid pressure from foreign businesses, the Ministry of Finance and the State Taxation Administration announced in late December the tax breaks will be extended for two more years.

Meanwhile, year-end bonuses will not be included solely in the month they are offered, but split evenly across 12 months, before 2024. Equity incentives offered by listed companies will be taxed separately until the end of this year."

More details in the piece. I'm not going to copy and paste the whole thing.

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