Individual Income Tax Legislation of the PRC

中华人民共和国个人所得税法律体系

China's individual income tax system was fundamentally reformed in 2018, introducing comprehensive income taxation, special additional deductions, and the 183-day tax residency test. The Individual Income Tax Law (个人所得税法) is the framework statute, supported by State Council implementation regulations and detailed STA administrative rules.

Framework Law and Implementation

• Individual Income Tax Law (个人所得税法, 1980, 7th amendment 2018) — 22 articles + 2 rate schedules. Defines taxpayer categories (resident/non-resident), 9 income categories, tax rates (3–45% progressive for comprehensive income, 20% flat for passive income), exemptions, and filing obligations
• Implementation Regulations (个人所得税法实施条例, State Council Order No. 707, 2018) — 36 articles detailing domicile definitions, income source rules, calculation methods, and administration

Deductions and Withholding

• Special Additional Deductions (专项附加扣除暂行办法, State Council [2018] No. 41) — 7 categories: children's education, continuing education, serious illness, housing loan interest, housing rent, elderly support, infant care (added 2022). Amounts increased in 2023
• Withholding Measures (扣缴申报管理办法, STA [2018] No. 61) — 21 articles on cumulative withholding method, filing deadlines, and withholding agent obligations

Non-Resident and Expatriate Rules

• Non-Domiciled Individuals Policy (MOF/STA [2019] No. 35) — 183-day residency test, six-year rule for worldwide income, income allocation methods for split residency
• Transition Rules (Caishui [2018] No. 164, extended to 2027) — separate taxation for annual bonuses, equity incentive taxation, and expatriate tax-exempt allowance choice (fringe benefits vs. special additional deductions)