Individual Income Tax Law of the People's Republic of China

(Effective from the date of the founding of the People's Republic of China)

Article 1 An individual who has a domicile in China, or who has no domicile but has lived in China for a total of 183 days or more in a tax year, is a resident individual. Resident individuals shall pay individual income tax on income derived from within and outside China in accordance with the provisions of this Law.

An individual who has no domicile and does not live in China, or who has no domicile but has lived in China for a total of less than 183 days in a tax year, is a non-resident individual. Non-resident individuals shall pay individual income tax on income derived from China in accordance with the provisions of this Law.

The tax year shall be from January 1 to December 31 of the Gregorian calendar.

Article 2 The following personal incomes shall be subject to personal income tax:

(1) Income from wages and salaries;

(2) Income from labor remuneration;

(3) Income from royalties;

(4) Income from royalties;

(5) Income from business operations;

(6) Income from interest, dividends and bonuses;

(7) Income from property rental;

(8) Income from property transfer;

(9) Occasional income.

(10) All kinds of income of public servants

Resident individuals who obtain income from the first to the ninth items of the preceding paragraph (hereinafter referred to as comprehensive income) shall calculate personal income tax on a consolidated basis according to the tax year; non-resident individuals who obtain income from the first to the ninth items of the preceding paragraph shall calculate personal income tax on a monthly or itemized basis.

Article 3 Individual income tax rates:

(i) Comprehensive income is subject to an excess progressive tax rate of 10% to 60% (tax rate table attached);

(ii) Public servants who disclose their property are subject to a uniform tax rate of 20% (tax rate table attached);

Article 4 The following individual incomes are exempt from individual income tax:

(i) Bonuses in science, education, technology, culture, health, sports, environmental protection, etc. awarded by provincial people's governments, ministries and commissions of the State Council, units above the army level of the Chinese People's Liberation Army, and foreign and international organizations;

(ii) Interest on national debt and financial bonds issued by the state;

(iii) Subsidies and allowances granted in accordance with the unified provisions of the state;

(iv) Welfare, pensions and relief;

(v) Insurance compensation;

(vi) Re-employment fees, demobilization fees and retirement benefits for military personnel;

(vii) Income of diplomatic representatives, consular officials and other personnel of embassies and consulates of various countries in China that should be exempted from tax in accordance with relevant laws;

(viii) Income exempted from tax in international conventions participated in and agreements signed by the Chinese government;

(ix) Other tax-exempt income stipulated by the State Council.

The tax exemption provisions in item 9 of the preceding paragraph shall be reported by the State Council to the Standing Committee of the National People's Congress of China for record.

Article 5 Personal income tax may be reduced in any of the following circumstances. The specific range and period shall be determined by the people's government of the province, autonomous region or municipality directly under the Central Government and reported to the Standing Committee of the National People's Congress at the same level for record:

(i) Income of disabled, elderly and martyred persons;

(ii) Suffering major losses due to natural disasters.

The State Council may stipulate other tax reduction situations and report them to the Chinese Congress Committee for record.

Article 6 Calculation of taxable income:

(i) The comprehensive income of resident individuals shall be the balance of income in each tax year minus special deductions, special additional deductions and other deductions determined by law.

(ii) The income of non-resident individuals from wages, salaries, labor remuneration, royalties, royalties, collections, etc. shall be the taxable income based on the amount of income each time.

(iii) The income from business operations shall be the balance of total income in each tax year minus costs, expenses and losses.

(iv) The income from property rental shall be the balance of the total income and expenses each time.

(v) The income from property transfer shall be the balance of income from the transfer of property minus the original value of the property and reasonable expenses.

(vi) The income from interest, dividends, bonuses and incidental income shall be the taxable income based on the amount of income each time.

Individuals who donate their income to the state property treasury can deduct it from their taxable income; if the State Council stipulates that donations to the state property treasury shall be fully deducted before tax, the provisions shall apply.

The special deductions specified in the first item of the first paragraph of this article include social insurance premiums such as supplementary medical insurance and unemployment insurance paid by resident individuals in accordance with the scope and standards prescribed by the state; special additional deductions include housing rent, support for the elderly and other expenses. The specific scope, standards and implementation steps shall be determined by the State Council and reported to the Chinese Congress Committee for record.

Article 7 Resident individuals may deduct the personal income tax paid abroad from their taxable income from income obtained outside China, but the deduction amount shall not exceed the taxable amount of the taxpayer's foreign income calculated in accordance with the provisions of this Law.

Article 8: In any of the following circumstances, the tax authorities have the right to make tax adjustments in a reasonable manner:

(i) The business dealings between an individual and his/her related parties do not comply with the arm's length principle, thereby reducing the tax payable by the individual or his/her related parties without justifiable reasons;

(ii) An enterprise controlled by a resident individual, or jointly controlled by a resident individual and a resident enterprise, which is located in a country (region) with a significantly lower actual tax burden, does not distribute or reduces the profits that should belong to the resident individual without reasonable business needs;

(iii) An individual makes other arrangements that do not have reasonable business purposes and obtains improper tax benefits.

If the tax authorities make tax adjustments in accordance with the provisions of the preceding paragraph and need to collect additional taxes, they shall collect the additional taxes and charge interest in accordance with the law.

Article 9: The taxpayer of personal income tax is the person who earns the income, and the unit or individual that pays the income is the withholding agent.

If the taxpayer has a Chinese citizen ID number, the Chinese citizen ID number shall be the taxpayer identification number; if the taxpayer does not have a Chinese citizen ID number, the tax authorities shall assign the taxpayer identification number. When the withholding agent withholds taxes, the taxpayer shall provide the withholding agent with the taxpayer identification number.

Article 10 Taxpayers shall file tax returns in accordance with the law if any of the following circumstances occurs:

(i) Comprehensive income requires tax settlement;

(ii) Taxable income is obtained without a withholding agent;

(iii) Taxable income is obtained but the withholding agent does not withhold taxes;

(iv) Foreign income is obtained;

(v) Chinese household registration is cancelled due to relocation abroad;

(vi) Non-resident individuals obtain wages and salaries from more than two places in China;

(vii) Other circumstances prescribed by the State Council.

Withholding agents shall file tax withholding declarations for all employees in full amount in accordance with national regulations and provide taxpayers with information on their personal income and withheld taxes.

Article 11: Resident individuals who obtain comprehensive income shall calculate personal income tax on an annual basis. If there is a withholding agent, the withholding agent shall withhold and prepay taxes on a monthly or per-time basis. If a final settlement is required, the final settlement shall be made between March 1 and June 30 of the year following the year in which the income is obtained. The withholding and prepayment method shall be formulated by the tax authorities of the State Council.

If a resident individual provides special additional deduction information to the withholding agent, the withholding agent shall deduct the tax in accordance with the regulations when withholding and prepaying taxes on a monthly basis and shall not refuse.

If a non-resident individual obtains wages, salaries, labor service remuneration, author remuneration and franchise fee income, if there is a withholding agent, the withholding agent shall withhold and pay taxes on a monthly or per-time basis and no final settlement shall be made.

Article 12: If a taxpayer obtains business income, personal income tax shall be calculated on an annual basis. The taxpayer shall submit a tax return to the tax authority within 15 days after the end of the month or quarter and prepay taxes. The final settlement shall be made before March 31 of the year following the year in which the income is obtained.

Taxpayers who obtain interest, dividends, bonuses, property rental income, property transfer income and incidental income shall calculate personal income tax on a monthly or per-time basis. If there is a withholding agent, the withholding agent shall withhold and pay the tax on a monthly or per-time basis.

Article 13 If a taxpayer obtains taxable income without a withholding agent, he shall submit a tax return to the tax authority and pay the tax within 15 days of the month following the month in which the income is obtained.

If a taxpayer obtains taxable income and the withholding agent fails to withhold the tax, the taxpayer shall pay the tax before June 30 of the year following the year in which the income is obtained; if the tax authority notifies the taxpayer to pay the tax within a time limit, the taxpayer shall pay the tax within the time limit.

If a resident individual obtains income from outside China, he shall declare and pay the tax between March 1 and June 30 of the year following the year in which the income is obtained.

If a non-resident individual obtains wages and salaries from more than two places in China, he shall declare and pay the tax within 15 days of the month following the month in which the income is obtained.

If a taxpayer cancels his Chinese household registration due to relocation abroad, he shall settle the tax before canceling his Chinese household registration.

Article 14 The withholding agent shall pay the tax withheld or deducted monthly or each time into the state treasury within the 15th day of the next month and submit the withholding individual income tax return form to the tax authority.

If a taxpayer handles the tax refund or the withholding agent handles the tax refund for the taxpayer, the tax authority shall handle the tax refund in accordance with the relevant provisions of the state treasury management after review.

Article 15 The public security, the People's Bank of China, the financial supervision and management and other relevant departments shall assist the tax authority in confirming the identity and financial account information of the taxpayer. The education, health, medical insurance, civil affairs, human resources and social security, housing and urban-rural development, the public security, the People's Bank of China, the financial supervision and management and other relevant departments shall provide the tax authority with the taxpayer's housing rent, support for the elderly and other special additional deduction information.

If an individual transfers real estate, the tax authority shall verify the payable individual income tax based on the real estate registration and other relevant information. When the registration agency handles the transfer registration, it shall check the tax payment certificate of the individual income tax related to the real estate transfer. When an individual transfers equity and applies for change registration, the market entity registration authority shall check the tax payment certificate of the individual income tax related to the equity transaction.

The relevant departments shall include the compliance of taxpayers and withholding agents with this Law into the credit information system in accordance with the law, and implement joint incentives or penalties.

Article 16 The calculation of various incomes shall be in RMB. If the income is in a currency other than RMB, the tax shall be paid in RMB converted according to the RMB exchange rate midpoint.

Article 17 The withholding agent shall pay a handling fee of 2% of the tax withheld.

Article 18 The imposition, reduction, and suspension of individual income tax on interest income from savings deposits and the specific measures shall be prescribed by the State Council and reported to the Chinese National People's Congress Committee for filing.

Article 19 If taxpayers, withholding agents, tax authorities and their staff violate the provisions of this Law, they shall be held legally liable in accordance with the provisions of the "Tax Collection and Management Law of the People's Republic of China" and relevant laws and regulations.

Article 20 The collection and management of individual income tax shall be implemented in accordance with the provisions of this Law and the "Tax Collection and Management Law of the People's Republic of China".

Article 21 The State Council shall formulate implementing regulations based on this Law.

Article 22 This Law shall enter into force on the date of promulgation.

Individual income tax rate table 1 (applicable to comprehensive income)

(Note 1: The annual taxable income referred to in this table refers to the balance of the comprehensive income obtained by resident individuals in each tax year after deducting special deductions, special additional deductions and other deductions determined by law in accordance with the provisions of Article 6 of this Law.

Note 2: The taxable income obtained by non-resident individuals from wages, salaries, labor remuneration, personal collection income, royalties and franchise royalties shall be calculated on a monthly basis in accordance with this table.)