English English

By Dai Qi

According to a draft amendment up for review by China's legislative body, the new Individual Income Tax Law is expected to take effect from Jan.1, 2019.

Before that, China will increase the deduction threshold from 3,500 yuan to 5,000 yuan per month from Oct. 1, 2018, to Dec. 31, 2018, which is a highlight of the new law.

The move is to relieve the imbalances between China's individual income tax revenue and people's disposable income.

Statistics from the Ministry of Finance showed that from the beginning of this year to July, China's individual income tax revenue reached 922.5 billion yuan in total, up by 20.6 percent  when compared with the same period last year.

Meanwhile, the country's per capita disposable income had increased by only 8.7 percent year-on-year, according to the China Daily.

Another highlight of the new law is to introduce itemized deductions for specific expenditures. The current deductible items include basic pension insurance, basic medical insurance, unemployment insurance and housing funds.

The draft, for the first time, sets up itemized deductions for specific expenditures in people's daily life, such as expenditures on children's education, continuing education, serious illness medical treatments, housing mortgage interest, and rentals, as well as the cost of caring for ageing parents.

Details about how the deductions for specific expenditures will be carried out are still being studied.

The state News Agency Xinhua said for the sake of fairness, the deductions are likely to be a fixed quota rather than vary with real expenditure.