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© 2018 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2016 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The Amendments to the PRC IIT Law Were Passed
On 31 August 2018, the Standing Committee of the National People’s Congress passed the amendment to reform PRC IIT Law (“the Amendment”). The Amendment was promulgated through the Presidential Decree No. 9, and will take full effect from 1 January 2019. The revised standard personal deduction and tax rates table will apply from 1 October 2018.
Key amendments
In addition to the key amendments which were discussed in Issues 14 and 16 of KPMG's China Tax Alerts issued in June and July 2018 respectively, the following are notable changes which were raised in the second review of the Draft and passed under the new law:
• Expenditures on supporting the elderly allowable for personal tax deduction: Considering the aging population and financial burden of supporting the elderly, the amendment allows expenditures on supporting the elderly to be tax deductible.
• Deemed expense deduction allowable for income from provision of independent personal services, author’s remuneration and royalties at 20% of gross income: Deemed expense at the rate of 20% of gross income will be allowed for income from provision of independent personal services, income from author’s remuneration and income from royalties. Income tax on author’s remuneration will be assessed on 70% of the net income after deducting the 20% deemed expenses.
• Charitable donations allowable for tax deductions: Charitable donations not exceeding 30% of one’s gross taxable income are allowable for tax deduction. Donations made to certain charities may not be subject to the 30% deductibility cap if approved by the State Council.
Regulations discussed in this issue:
Amendments to the PRC Individual Income Tax (“IIT”) Law (hereafter referred to as “the Amendments”)
Issue 18, August 2018
China Tax Alert
© 2018 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2016 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
• Withholding agents shall furnish tax withholding statement toindividual taxpayers: In order for individual taxpayers to lodgeaccurate annual tax reconciliation return, withholding agents shallfurnish details of the amount of tax withheld, and other relevantinformation to individual taxpayers.
KPMG Observations
The passing of the Amendment is a significant milestone in the evolution of China’s tax system. Further regulations and guidelines are expected from the State Council in due course.
The following key interest of the practical considerations associated with the new IIT Law are expected to be further addressed in the implementation rules and guidelines:
- Whether an exemption on foreign sourced income will still beavailable to non-domiciled individual (including residents of HongKong, Macao and Taiwan) residing in China for not more than five fullconsecutive years?
- How the new tax laws will interact with the preferential treatmentapplied to annual bonuses?
- The quantum of allowable itemised deduction through the applicationof caps.
- Whether foreign employees’ tax exempt benefits will still beapplicable?
Individual taxpayers and organisations are recommended to review the implications of the Amendment on their personal tax affairs and company policies concerning employees, focusing on the following areas:
- Corporate HR Policy updates
- Implementation of updated HR policy
- Financial impact forecasting and budgeting
- Employee communication
- Individual tax risk assessment
© 2018 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2016 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.© 2018 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2016 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
If you have any questions on the above, KPMG will be pleased to assist and provide relevant guidance and assist accordingly.
创新赋能 税道渠成
China
Lewis LuHead of TaxKPMG ChinaT: +86 (21) 2212 3421E: [email protected]
Murray SareliusHead of Global Mobility ServicesKPMG ChinaT: +852 3927 5671E: [email protected]
Vincent PangHead of Tax, Northern ChinaKPMG ChinaT: +86 (532) 8907 1728E: [email protected]
Sheila ZhangDirector KPMG ChinaT: +86 (10) 8508 7507E: [email protected]
Michelle ZhouPartnerKPMG ChinaT: +86 (21) 2212 3458E: [email protected]
Northern China
Central China
Vivian ZhouDirectorKPMG ChinaT: +86 (10) 8508 3360E: [email protected]
Jason JiangDirectorKPMG ChinaT: +86 (21) 2212 3527E: [email protected]
Contact us
Southern China
Murray SareliusHead of Global Mobility ServicesKPMG ChinaT: +852 3927 5671E: [email protected]
© 2018 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2016 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
© 2018 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2018 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
For any enquiries, please send to our public mailbox: [email protected] or contact our partners/directors in each China/HK offices.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate andtimely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on suchinformation without appropriate professional advice after a thorough examination of the particular situation.
Contact Us
Khoonming HoHead of Tax,KPMG Asia PacificTel. +86 (10) 8508 [email protected]
Lewis LuHead of Tax,KPMG China Tel. +86 (21) 2212 [email protected]
Beijing/Shenyang/QingdaoVincent PangTel. +86 (532) 8907 [email protected]
TianjinEric ZhouTel. +86 (10) 8508 [email protected]
Shanghai/Nanjing/ChengduAnthony ChauTel. +86 (21) 2212 [email protected]
HangzhouJohn WangTel. +86 (571) 2803 [email protected]
GuangzhouLilly LiTel. +86 (20) 3813 [email protected]
Fuzhou/XiamenMaria MeiTel. +86 (592) 2150 [email protected]
ShenzhenEileen SunTel. +86 (755) 2547 [email protected]
Hong KongKarmen YeungTel. +852 2143 [email protected]
Northern China
Vincent PangHead of Tax,Northern RegionTel. +86 (10) 8508 7516
+86 (532) 8907 [email protected]
Cheng ChiTel. +86 (10) 8508 [email protected]
Conrad TURLEYTel. +86 (10) 8508 [email protected]
Milano FangTel. +86 (532) 8907 [email protected]
Tony FengTel. +86 (10) 8508 [email protected]
Flora FanTel. +86 (10) 8508 [email protected]
John GuTel. +86 (10) 8508 [email protected]
Rachel GuanTel. +86 (10) 8508 [email protected]
Helen HanTel. +86 (10) 8508 [email protected]
Michael WongTel. +86 (10) 8508 [email protected]
Josephine JiangTel. +86 (10) 8508 [email protected]
Henry KimTel. +86 (10) 8508 [email protected]
David Ling Tel. +86 (10) 8508 [email protected]
Li LiTel. +86 (10) 8508 [email protected]
Lisa LiTel. +86 (10) 8508 [email protected]
Larry LiTel. +86 (10) 8508 [email protected]
Lucia LiuTel. +86 (10) 8508 [email protected]
Alan O’ConnorTel. +86 (10) 8508 [email protected]
Shirley ShenTel. +86 (10) 8508 [email protected]
Joseph TamTel. +86 (10) 8508 [email protected]
Joyce TanTel. +86 (10) 8508 [email protected]
Cynthia XieTel. +86 (10) 8508 [email protected]
Christopher XingTel. +86 (10) 8508 [email protected]
Irene YanTel. +86 (10) 8508 [email protected]
Adams YuanTel. +86 (10) 8508 [email protected]
Jessie ZhangTel. +86 (10) 8508 [email protected]
Sheila ZhangTel: +86 (10) 8508 [email protected]
Tiansheng ZhangTel. +86 (10) 8508 [email protected]
Tracy ZhangTel. +86 (10) 8508 [email protected]
Eric ZhouTel. +86 (10) 8508 [email protected]
Vivian ZhouTel. +86 (10) 8508 [email protected]
Central China
Anthony ChauHead of Tax,Eastern & Western RegionTel. +86 (21) 2212 [email protected]
Yasuhiko OtaniTel. +86 (21) 2212 [email protected]
Johnny DengTel. +86 (21) 2212 [email protected]
Cheng DongTel. +86 (21) 2212 [email protected]
Chris GeTel. +86 (21) 2212 [email protected]
Chris HoTel. +86 (21) 2212 [email protected]
Henry WongTel. +86 (21) 2212 [email protected]
Jason JiangTel. +86 (21) 2212 [email protected]
Sunny LeungTel. +86 (21) 2212 [email protected]
Michael LiTel. +86 (21) 2212 [email protected]
Karen LinTel. +86 (21) 2212 [email protected]
Benjamin LuTel. +86 (21) 2212 [email protected]
Christopher MakTel. +86 (21) 2212 [email protected]
Naoko HirasawaTel. +86 (21) 2212 [email protected]
Ruqiang PanTel. +86 (21) 2212 [email protected]
Amy RaoTel. +86 (21) 2212 [email protected]
Wayne TanTel. +86 (28) 8673 [email protected]
Tanya TangTel. +86 (25) 8691 [email protected]
Rachel TaoTel. +86 (21) 2212 3473 [email protected]
Janet WangTel. +86 (21) 2212 [email protected]
John WangTel. +86 (571) 2803 [email protected]
Mimi WangTel. +86 (21) 2212 [email protected]
Jennifer WengTel. +86 (21) 2212 [email protected]
Grace XieTel. +86 (21) 2212 [email protected]
Bruce XuTel. +86 (21) 2212 [email protected]
Jie XuTel. +86 (21) 2212 [email protected]
Robert XuTel. +86 (21) 2212 [email protected]
Jason YuTel. +86 (21) 2212 [email protected]
William ZhangTel. +86 (21) 2212 [email protected]
Hanson ZhouTel. +86 (21) 2212 [email protected]
Michelle ZhouTel. +86 (21) 2212 [email protected]
Eric ZhangTel. +86 (21) 2212 [email protected]
Kevin ZhuTel. +86 (21) 2212 [email protected]
Southern China
Lilly LiHead of Tax,Southern RegionTel. +86 (20) 3813 [email protected]
Vivian ChenTel. +86 (755) 2547 1198 [email protected]
Nicole CaoTel. +86 (20) 3813 [email protected]
Sam FanTel. +86 (755) 2547 [email protected]
Joe FuTel. +86 (755) 2547 [email protected]
Ricky GuTel. +86 (20) 3813 [email protected]
Fiona HeTel. +86 (20) 3813 [email protected]
Angie HoTel. +86 (755) 2547 [email protected]
Aileen JiangTel. +86 (755) 2547 [email protected]
Cloris LiTel. +86 (20) 3813 [email protected]
Jean LiTel. +86 (755) 2547 [email protected]
Sisi LiTel. +86 (20) 3813 [email protected]
Mabel LiTel. +86 (755) 2547 [email protected]
Kelly LiaoTel. +86 (20) 3813 [email protected]
Patrick LuTel. +86 (755) 2547 [email protected]
Grace LuoTel. +86 (20) 3813 [email protected]
Ling Lin Tel. +86 (755) 2547 [email protected]
Maria Mei Tel. +86 (592) 2150 [email protected]
Chris XiaoTel. +86 (755) 3813 [email protected]
Eileen SunTel. +86 (755) 2547 [email protected]
Michelle SunTel. +86 (20) 3813 [email protected]
Bin YangTel. +86 (20) 3813 [email protected]
Lixin ZengTel. +86 (20) 3813 [email protected]
Nicole ZhangTel. +86 (20) 3813 [email protected]
Hong Kong
Curtis NgHead of Tax, Hong KongTel. +852 2143 [email protected]
Ayesha M. LauTel. +852 2826 [email protected]
Chris AbbissTel. +852 2826 [email protected]
Darren BowdernTel. +852 2826 [email protected]
Yvette ChanTel. +852 2847 [email protected]
Lu ChenTel. +852 2143 [email protected]
Wade WagatsumaTel. +852 2685 [email protected]
Natalie ToTel. +852 2143 [email protected]
Elizabeth DE LA CRUZTel. +852 2826 [email protected]
Matthew FenwickTel. +852 2143 [email protected]
Sandy FungTel. +852 2143 [email protected]
Charles KinsleyTel. +852 2826 [email protected]
Stanley HoTel. +852 2826 [email protected]
Becky WongTel. +852 2978 [email protected]
Barbara ForrestTel. +852 2978 [email protected]
John KondosTel. +852 2685 [email protected]
Kate LaiTel. +852 2978 [email protected]
Travis LeeTel. +852 2143 [email protected]
Irene LeeTel. +852 2685 [email protected]
Alice LeungTel. +852 2143 [email protected]
Ivor MorrisTel. +852 2847 [email protected]
Benjamin PongTel. +852 2143 [email protected]
Malcolm PrebbleTel. +852 2684 [email protected]
David SiewTel. +852 2143 [email protected]
Murray SareliusTel. +852 3927 [email protected]
John TimpanyTel. +852 2143 [email protected]
Lachlan WolfersTel. +852 2685 [email protected]
Daniel HuiTel. +852 2685 [email protected]
Karmen YeungTel. +852 2143 [email protected]
Erica ChanTel. +852 3927 [email protected]
Adam ZhongTel. +852 2685 [email protected]
Eva ChowTel. +852 2685 [email protected]
Alexander ZEGERSTel. +852 2143 [email protected]
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