China Taxation
Guidance on Annual Individual Income Tax Declaration for Fiscal Year of 2019 in China
On December 31, 2019 China’s State Administration of Taxation issued the “Announcement of Annual Individual Income Tax Declaration for Comprehensive Individual Income for the fiscal year of 2019”, which provides detailed guidance for handling the annual individual income tax declaration for the fiscal year of 2019. We have sorted out the main content of this announcement as following for your reference.
In accordance with the provisions of the Individual Income Tax Law, by the end of fiscal year of 2019, individual residents need to aggregate four types of income, including “Wages and Salaries”, “Labor Remuneration”, “Author’s Remuneration”, and “Royalties” (hereinafter refer to as “Comprehensive Income”), and deduct RMB60,000 expense, special deductions, special additional deductions and other deductions determined by the laws for the period of 01.01.2019 - 31.12.2019; then multiply with the applicable tax rate for comprehensive income and deduct the quick deduction (please refer to Annex 1: The Rate Schedule) to calculate the amount of annual tax payable; then deduct the annual tax prepaid for fiscal year of 2019, recognize the tax amount to be refunded or repaid and apply with the tax authorities for tax refund or repayment. The computation formula is as follows:
The calculation method of the tax amount to be refunded or repaid for the fiscal year of 2019
= [(Comprehensive income - RMB60,000 - Special deductions of social insurance and housing provident fund contributions - Children’s education deduction and other special additional deductions – Other deductions determined by the laws) × Applicable tax rate - Quick deduction] – the annual tax prepaid for the fiscal year of 2019