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The Interim Measures for Additional Special Deductions for Individual Income Tax

Chapter I General Provisions

Article 1 The Interim Measures for Additional Special Deductions for Individual Income Tax (the "Measures") are hereby formulated in accordance with the Individual Income Tax Law of the People's Republic of China (the “IIT Law”).

Article 2 For the purpose of the Measures, the additional special deductions for individual income tax refer to six types of additional special deductions of expenses for children's education, expenses for continuing education, medical expenses for serious diseases, housing mortgage interest or house rent, and elderly care expenses as provided in the IIT Law.

Article 3 The additional special deductions for individual income tax shall be carried out in line with the principles of fairness, reasonableness, convenience, alleviating burdens on taxpayers and improving people's livelihood.

Article 4 The scope of and standard for the additional special deductions shall be adjusted promptly in light of changes to expenses for people's livelihood such as education, medical treatment, housing and elderly care expenses.

Chapter II Children's Education

Article 5 Expenses for academic education of children of a taxpayer shall be deducted as per the standard quota of CNY1,000 per month for each child.

The academic education includes compulsory education (primary school and junior middle school education), senior high school education (general senior secondary school, secondary vocational education, and technical education) and higher education (junior college, undergraduate, postgraduate and doctoral education).

Expenses for the pre-school education from the age of three to primary school of a taxpayer shall be implemented in accordance with the provisions of the preceding paragraph.

Article 6 The additional special deduction for children's education shall be deducted as per 100% of the deduction standard for the father or the mother, or per 50% of the deduction standard for the father and mother of a child receiving education respectively. The specific deduction method may not be changed within one taxable year.

Article 7 If the children of a taxpayer receives education abroad, the taxpayer shall keep the overseas school’s admission notice, study visa and other relevant education certificates for future reference.

Chapter III Continuing Education

Article 8 Expenses for continuing domestic academic (degree) education of a taxpayer shall be deducted as per the quota of CNY400 per month during the academic (degree) education. The deduction period for the same continuing academic (degree)  education shall not exceed 48 months. Expenses for the continuing education of professional qualifications of skilled personnel or the continuing education of professional qualifications of specialized technicians of a taxpayer shall be deducted as per the quota of CNY3,600 per year in the year when he/she obtains relevant certificate.

Article 9 Where an individual receives continuing academic (degree) education of bachelor degree or below, meeting deduction conditions specified under the Measures, the said education expenses may be deducted from the taxable incomes of the parents of the individual as expenses for children's education or from the taxable income of the individual himself/herself as expenses for continuing education.

Article 10 The taxpayer who receives continuing education of professional qualifications of skilled personnel or the continuing education of professional qualifications of specialized technicians shall keep the relevant certificate for future reference.

Chapter IV Medical Treatment of Serious Diseases

Article 11 Within a taxable year, the part exceeding CNY15,000 of the accumulated medical expenses of an individual related with the basic medical insurance after deduction of medical insurance reimbursement (the part of payments paid by the individual within the scope of the medical insurance directory) shall be deducted against actual payment within the limit of CNY 80,000 when the taxpayer makes final settlement of tax payment.

Article 12 The medical expenses incurred by a taxpayer may be deducted by the taxpayer himself/herself or his/her spouse; the medical expenses incurred by the minor child may be deducted by his/her father or mother.

For medical expenses incurred by a taxpayer, his/her spouse or minor children, the deductions shall be calculated separately in accordance with the provisions of Article 11 of the Measures.

Article 13 The taxpayer shall keep the original (or photocopy) of the medical service charges and the medical insurance reimbursement receipts for future reference. The medical security department shall provide the patient with the annual medical fee information inquiry service recorded in the medical security information system.

Chapter V Housing Mortgage Interest

Article 14 Where a taxpayer or his/her spouse purchases the first house in China for himself/herself or his/her spouse by using the individual housing loan of a commercial bank or housing provident fund, the first housing mortgage interest may be deducted as per the standard quota of CNY1,000 per month during the loan repayment term. The deduction period shall not exceed 240 months at maximum. A taxpayer may only enjoy the deduction of housing mortgage interest for the first house.

For the purpose of the Measures, the first housing mortgage refers to the housing mortgage that enjoys the first housing mortgage interest rate.

Article 15 Upon agreement by a couple, the housing mortgage interest may be deducted from the taxable income of one party. The specific deduction method shall not be changed within one taxable year.

For the couple who has purchased the first house before marriage respectively, the house mortgage interest can be deducted as per 100% of the deduction standard of one house for the husband or the wife, or per 50% of the deduction standard of the house for the husband and wife purchasing his/her house respectively. The specific deduction method shall not be changed within one taxable year.

Article 16 A taxpayer shall keep his /her housing mortgage contract and loan repayment vouchers for future reference.

Chapter VI House Rent

Article 17 Where a taxpayer does not have a house in the main work city of the taxpayer, house rent paid for a house rented in the main work city may be deducted as per any of the following standard quotas:

1. where the rented house is located in a municipality directly under the Central Government, a provincial capital, a city specifically designated in the State plan or any other city determined by the State Council, the deduction standard shall be CNY1,500 per month;

2. where the rented house is located in any other city with a registered population within municipal districts of more than 1 million, the deduction standard shall be CNY1,100 per month; where the rented house is located in any other city with a registered population within municipal districts of not more than 1 million, the deduction standard shall be CNY800 per month.

Where the taxpayer's spouse has his/her own house in the taxpayer's main working city, the taxpayer shall be deemed to have his/her own house in the main working city.

The registered population of the municipal district shall be subject to the data published by the National Bureau of Statistics.

Article 18 For the purpose of the Measures, the main work city refers to all administrative areas of municipalities directly under the Central Government, cities specifically designated in the State plan, sub-provincial cities and prefecture-level cities (prefectures, autonomous prefectures and leagues) where a taxpayer is employed, or the city that receives the final settlement of tax payment for general income of a taxpayer, if the taxpayer is not employed by any entity.

Where a couple works in the same main work city, the house rent shall be deducted for one party only.

Article 19 The house rent shall be deducted for the tenant concluding a house renting contract.

Article 20 A taxpayer and his/her spouse shall not respectively enjoy the additional special deduction for housing mortgage interest and the additional special deduction for house rent simultaneously.

Article 21 A taxpayer shall keep the house renting contract, agreement or any other documents for future reference.

Chapter VII Elderly Care

Article 22 Elderly care expenses paid by a taxpayer for supporting parents of one or above may be deducted as per any of the following standard quotas:

1. where a taxpayer is the only child, the expenses shall be deducted as per the standard quota of CNY2,000 per month;

2. where a taxpayer is not the only child, the deduction quota of CNY2,000 per month shall be apportioned among the taxpayer and his/her brothers and sisters by means of apportionment and the deduction amount apportioned to each taxpayer shall not exceed CNY1,000 per month. The deduction amount may be equally apportioned or apportioned by agreement, or apportioned by the elderly through designation. Where the designated or agreed apportionment is adopted, a written apportionment agreement shall be entered into. Where the designated apportionment is inconsistent with the agreed apportionment, the designated apportionment shall prevail. The concrete apportionment method and quota shall not be changed within one taxable year.

Article 23 For the purpose of the Measures, the elderly shall refer to parents aged above 60 (inclusive) and great parents aged above 60 (inclusive) whose children have been deceased.

Chapter VIII Supporting Measures

Article 24 Where a taxpayer requests for any invoice, financial bill or payment voucher from a payee, the payee shall not refuse it.

Article 25 Where a taxpayer enjoys the additional special deductions for the first time, he/she shall submit relevant information to the withholding agent or tax authority concerned. The withholding agent shall submit relevant information to the tax authority in a timely manner, and the taxpayer shall be responsible for the truthfulness, accuracy and completeness of the submitted information. In case of a change in the information related to the additional special deductions, the taxpayer shall provide the withholding agent or tax authority with the relevant information in a timely manner.

The information related to the additional special deductions specified in the preceding paragraph includes the personal identity information of a taxpayer, his/her spouse, any minor children, any elderly dependent and others if applicable, as well as any other information related to the additional special deductions as stipulated by the competent department for tax under the State Council.

Article 26 Relevant departments and entities shall provide a tax department with or assist it in verifying the following information related to the additional special deductions:

1. as for the public security department, the relevant identity basic information, household registration information, entry and exit document information, studying abroad information of a student, death indication of a household citizen and other information;

2. as for the health department, the relevant medical birth certificate information and single child information;

3. as for the civil affairs department, the foreign affairs department or the supreme people’s court, the relevant marriage registration information;

4. as for the education department, the relevant school register information of a student (including the school register information and examination information of a student receiving continuing academic (degree) education), or the qualification information of an overseas education institution filed at relevant department;

5. as for the department of human resources and social security or any other related department, the school register information of a student from a technical school, continuing education information of professional qualifications of skilled personnel or the continuing education information of professional qualifications of specialized technician;

6. as for the housing and urban-rural development department, the relevant house (including public rental house) rental information, and as for the administrative authority for the housing provident fund, the information on the repayment for housing provident fund loans;

7. as for the department of natural resources, the relevant real estate registration information;

8. as for the People's Bank of China or the financial regulatory department, the information on the repayment for commercial housing loans;

9. as for the medical security department, the information on medical expenses paid by individual recorded in the medical security information system; and

10. any other tax-relevant information identified by the competent department for tax under the State Council.

The format, standard and method of sharing of the aforesaid data and information shall be determined by the competent department for tax under the State Council and the administration of taxation of various provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the State plan upon consultation with the relevant department.

Where any relevant department or entity has any information related to the additional special deductions but refuses to provide it to a tax department, the person in charge and other persons involved of the department or entity having tax-related information shall be liable.

Article 27 Where a withholding agent finds that a taxpayer submits any false information, it can ask the taxpayer to make corrections; if the taxpayer refuses to do so, it shall notify the tax authority concerned for timely processing.

Article 26 Where a tax authority checks on the additional special deductions, the relevant departments and individuals such as the police station, the residents' committee or the villagers' committee of the place of the employer, the place of residence and the household registration place of the taxpayer shall provide assistance.

Chapter IX Supplementary Provisions

Article 29 For the purpose of the Measures, parents refer to biological parents, stepparents and adoptive parents. For the purpose of the Measures, children refer to children born inside and outside marriage, stepchildren and adopted children. Where any person other than parents acts as the guardian of a minor, the Measures shall apply mutatis mutandis.

Article 30 The special deduction of individual income tax deductible for a taxable year shall not be carried forward after the annual deduction.

Article 31 The specific operation methods for the Measures shall be separately formulated by the competent department for tax under the State Council.

Article 32 The Measures shall come into effect as of January 1, 2019.