(Yicai Global) Sept. 8 -- Beijing is mulling introducing a 15 percent cap on personal income tax to attract more high-end foreign talent to the capital city in order to speed up the development of its service industry, according to a newly issued government document.
Yesterday, the country’s cabinet approved a pilot plan to further build up Beijing’s service industry. One of the options being explored is preferential tax policies for highly skilled foreign workers.
A 15 percent cap would be a huge drop from the current maximum income tax rate of 45 percent for a gross annual wage of CNY960,000 (USD140,509) and above. The Guangdong-Hong Kong-Macao Greater Bay Area and the Shanghai Free Trade Zone’s Lingang New Area already have a 15 percent income tax threshold for select foreign talent in order to help their development.
Beijing has always wanted the same rights as its current high tax rates have discouraged overseas skilled workers from moving to the city, said Shi Wenwen, director of the Finance and Taxation Law Research Center of the China University of Political Science and Law.
However, Beijing will not simply copy the personal tax policies used in other regions but will instead tailor them to its particular needs, said Jiang Zhen, an associate researcher at the Institute of Financial and Economic Strategy of the Chinese Academy of Social Sciences.
The preferential policies, which could be introduced as early as this year, will be limited to specific areas of the city such as the Zhongguancun National Innovation Demonstration Zone in order to help improve tax collection and management.
Beijing’s income tax revenue rose 8.4 percent in the first seven months of the year from the same period last year to CNY35.7 billion (USD5.2 billion).
Editor: Kim Taylor