(Yicai Global) June 19 -- The Standing Committee of China’s National People’s Congress, the country’s top legislature, has today started its deliberation on keenly-expected draft amendments to the individual income tax law.
The most striking change in the draft proposes to raise the monthly individual income tax threshold to CNY5,000 (USD773) from the current CNY3,500. The draft also suggests a radical overhaul to a number of tax regimes, which could lead to significantly reduced tax burden on low- and middle-income taxpayer groups, state-run Xinhua News Agency reported.
If adopted, the amendment will be the seventh major adjustment in the personal income tax law since its enactment in 1980.
Wages, service remuneration and royalties will be taxed for the first time based on their annual total, per the draft amendment.
The proposed changes also recommend special additional deduction for expenditures on children’s education and continuing education, serious illness, home loan interest and housing rent, Xinhua added.
The draft proposes optimizing and adjusting the tax rate structure and expanding the range of lower tax rate brackets, Xinhua said. Some income categories currently subject to a 10 percent tax rate will be cut down to 3 percent; some income categories currently subject to 20 percent to 25 percent tax ratio will be subject to a 10 percent tax, while some others currently taxed at 25 percent rate will be reduced to 20 percent.
All the proposed changes will lead to a significantly reduced tax burden for many taxpayers, said China's Finance Minister Liu Kun in a report submitted to the Standing Committee. It will help increase their incomes and enhance their spending power, Liu added.
The draft also includes anti-tax evasion clauses for the first time, giving tax collectors authority to make tax adjustments using appropriate means if individuals avoid paying taxes through overseas tax havens or obtain illegal tax gains via unreasonable commercial arrangements.
Editor: Mevlut Katik