Document Number : Announcement No. 61 [2018] of the State Administration of Taxation  

Area of Law : Individual Income Tax

Level of Authority : Departmental Regulatory Documents

Date issued : 12-21-2018  

Effective Date : 01-01-2019  

Issuing Authority : State Taxation Administration

Status : Effective

Announcement of the State Administration of Taxation on Issuing the Measures for the Filing of Individual Income Tax Withholding Returns (for Trial Implementation)

(Announcement No. 61 [2018] of the State Administration of Taxation)

For the purpose of implementing the newly amended Individual Income Tax Law of the People's Republic of Chinaand the Regulation on the Implementation thereof, the State Administration of Taxation has developed the Measures for the Filing of Individual Income Tax Withholding Returns (for Trial Implementation), which are hereby issued and shall come into force on January 1, 2019.

Annex: Individual Income Tax Rate Schedule and Individual Income Tax Withholding Rate Schedule

State Administration of Taxation

December 21, 2018

Measures for the Filing of Individual Income Tax Withholding Returns (for Trial Implementation)

Article 1 For the purposes of regulating the filing of individual income tax withholding returns, and safeguarding the legitimate rights and interests of taxpayers and withholding agents, these Measures are developed in accordance with the provisions of the Individual Income Tax Law of the People's Republic of Chinaand the Regulation on the Implementation thereof, the Law of the People's Republic of China on the Administration of Tax Collectionand the Detailed Rules for the Implementation thereof.

Article 2 "Withholding agents" means the entities or individuals making payments of income to individuals. A withholding agent shall file withholding returns for all taxpayers in full amount in accordance with the law .

"Filing withholding returns for all taxpayers in full amount" means that a withholding agent shall, within the first 15 days in the month after taxes are withheld, submit to the competent tax authority the relevant information on all individuals to whom it pays incomes, the amounts of the paid incomes, deductibles and the amounts thereof, specific amounts of taxes withheld and the total amount thereof, and other relevant tax-related information and materials.

Article 3 The taxes deducted in advance or withheld by a withholding agent each month or in each transaction shall be paid to the state treasury within the first 15 days of the next month, with an Individual Income Tax Withholding Return submitted to the tax authority.

Article 4 The taxable income subject to the filing of individual income tax withholding returns for all taxpayers in full amount shall include:

(1) income from wages and salaries;

(2) income from remunerations for labor services;

(3) income from author's remunerations; 

(4) income from royalties;

(5) income from interest, dividends and bonuses;

(6) income from the lease of property;

(7) income from the conveyance of property; and

(8) contingent income.

Article 5 A withholding agent shall, when paying any income to a taxpayer for the first time, complete the Form of Basic Information on Individual Income Tax (Table A) based on the taxpayer's identification number and other basic information provided by the taxpayer, and submit it to the tax authority at the time of filing of withholding returns in the next month.

A withholding agent shall submit the changes in relevant basic information reported by a taxpayer to it or him to the tax authority at the time of filing of withholding returns in the next month.

Article 6 A withholding agent shall, when paying wages and salaries to a resident individual, calculate the taxes withheld in the cumulative withholding method, and file withholding returns on a monthly basis.

"Cumulative withholding method" means that a withholding agent, at the time of withholding and prepayment of taxes in a tax year, calculates the cumulative amount of taxes that shall be withheld and prepaid based on the cumulative amount of taxable income withheld and prepaid, which is the balance after deducting cumulative tax-exempt income, cumulative subtracted expenses, cumulative special deductibles, cumulative special additional deductibles and cumulative amounts of other deductibles determined in accordance with the law from the cumulative income from wages and salaries of a taxpayer in this entity until the current month, and the Schedule 1 of Individual Income Tax Withholding Rates (see Annex), and then takes the balance after deducting cumulative amount of tax credits and the cumulative amount of taxes that have been withheld and prepaid from the said cumulative amount of taxes that shall be withheld and prepaid as the amount of taxes that shall be withheld and prepaid in the current period. When the balance is negative, tax shall not be refunded temporarily. When the balance after the end of the tax year is still negative, the taxpayer shall file an annual comprehensive income tax return on a consolidated basis with the competent tax authority to refund overpaid taxes and make up the deficiency.

The specific calculation formulas are as follows:

Amount of taxes that shall be withheld and prepaid in the current period = (Cumulative amount of taxable income withheld and prepaid × Withholding tax rate - Quick deduction) - Cumulative amount of tax credits - Cumulative amount of taxes that have been withheld and prepaid

Cumulative amount of taxable income withheld and prepaid = Cumulative income - Cumulative tax-exempt income - Cumulative subtracted expenses - Cumulative special deductibles - Cumulative special additional deductibles - Cumulative amounts of other deductibles determined in accordance with the law.

Cumulative subtracted expenses thereof shall be 5,000 yuan/month multiplied by the number of months when the taxpayer is employed by the entity until this month in the current year.

Article 7 Where a resident individual provides relevant information to the withholding agent and requests the withholding agent to conduct the deduction of special additional deductibles in accordance with the law, the withholding agent shall, as required, deduct the special additional deductibles when withholding and prepaying taxes on the income from wages and salaries on a monthly basis, and shall not refuse to do so.

Article 8 A withholding agent shall, when paying to a resident individual remunerations for labor services, author's remunerations, or royalties, withhold or prepay taxes thereon on a transaction-by-transaction basis or monthly basis in the following methods:

The amount of remunerations for labor services, author's remunerations, and royalties shall be reduced by subtracting expenses. The amount of income from author's remunerations shall be calculated at 70% of the income obtained.

Subtracted expenses: At the time of withholding and prepayment of taxes, for the remunerations for labor services, author's remunerations, and royalties, the subtracted expenses shall be 800 yuan if the income is less than 4,000 yuan each time, and subtracted expenses shall be 20% of the income if the income is 4,000 yuan or more each time.

Amount of taxable income: For remunerations for labor services, author' s remunerations, and royalties, the amount of taxes that shall be withheld and prepaid shall be calculated by taking the amount of income obtained each time as the amount of taxable income withheld and prepaid. The Schedule 2 of Individual Income Tax Withholding Rates (see Annex 2) shall apply to remunerations for labor services, and the proportional withholding tax rate of 20% shall apply to author's remunerations and royalties.

A resident individual shall, when filing an annual comprehensive income tax return on a consolidated basis, calculate the amount of income from remunerations for labor services, author's remunerations, and royalties in accordance with the law, and incorporate such income into the annual comprehensive income for the calculation of taxes payable, with overpaid taxes to be refunded and deficiency to be made up.

Article 9 A withholding agent shall, when paying to a resident individual wages and salaries, remunerations for labor services, author's remunerations, or royalties, withhold taxes thereon on a monthly or transaction-by-transaction basis in the following methods:

For wages and salaries of a nonresident individual, the amount of taxable income shall be the amount of monthly income less expenses of 5,000 yuan; and for remunerations for labor services, author's remunerations, and royalties, the amount of taxable income shall be the amount of income obtained each time, and the amount of tax payable thereon shall be calculated based on the Schedule 3 of Individual Income Tax Rates (see Annex). The amount of income from remunerations for labor services, author's remunerations, and royalties thereof shall be reduced by subtracting expenses at 20% of the income obtained. The amount of income from author's remunerations shall be calculated at 70% of the income obtained.

A nonresident individual shall be subject to the same tax withholding method within one tax year, and shall, when being eligible as a resident individual, notify the withholding agent of the changes in his or her basic information, and file a tax return on a consolidated basis according to the provisions on resident individuals after the end of the year.

Article 10 A withholding agent shall, when paying interest, dividends and bonuses, income from the lease of property, income from the conveyance of property, or contingent income, withhold taxes on a transaction-by-transaction or monthly basis in accordance with the law.

Article 11 Where income from remunerations for labor services, author's remunerations, and royalties is a lump-sum income, it is counted as a single payment when the income is obtained; and where such income is successive payments under the same item of income, income obtained within a month is counted as a single payment.

As for income from the lease of property, income received within a month is counted as a single payment.

As for income from interest, dividends and bonuses, income obtained at each payment of interest, dividends and dividends is counted as a single payment.

As for contingent income, such income obtained each time is counted as a single payment.

Article 12 Where a taxpayer needs to be treated under a tax agreement, he or she shall make a request to the withholding agent when obtaining a taxable income, and submit relevant information and materials, and the withholding agent shall, when withholding taxes, handle relevant matters in accordance with the relevant measures regarding the treatment under tax agreements.

Article 13 The withholding agent that pays wages and salaries shall, within two months after the end of a tax year, provide the taxpayers with their individual incomes, taxes withheld, and other information. Where a taxpayer needs to provide the aforesaid information in the middle of a tax year, the withholding agent shall provide such information.

Where a taxpayer obtains any income other than wages and salaries, the withholding agent shall, after withholding taxes, provide the taxpayer with his or her individual income, taxes withheld, and other information in a timely manner.

Article 14 A withholding agent shall calculate taxes and file withholding returns based on the information provided by a taxpayer, and may not change the information provided by the taxpayer without authorization.

If a withholding agent finds that the information provided by a taxpayer is inconsistent with the actual circumstances, the withholding agent may require the taxpayer to correct the relevant information. If the taxpayer refuses to do so, the withholding agent shall report to the tax authority, and the tax authority shall handle it in a timely manner.

If a taxpayer finds that the personal information, paid income, taxes withheld or other information provided by the withholding agent or in the filing of withholding returns is inconsistent with the actual circumstances, he or she shall have the right to request the withholding agent to correct the relevant information. If the withholding agent refuses to do so, the taxpayer shall report to the tax authority, and the tax authority shall handle it in a timely manner.

Article 15 Withholding agents shall, as required, properly preserve theInformation Form for Special Additional Deductibles of Individual Income Taxprovided by taxpayers for future reference.

Article 16 Withholding agents shall keep confidential the special additional deductibles and other tax-related information and materials submitted by taxpayers in accordance with the law.

Article 17 A service fee equivalent to 2% of the amount of taxes withheld by a withholding agent as required shall be paid to the withholding agent per year. The said taxes shall exclude tax arrears to be made up or taxes ordered to be withheld in a supplementary manner upon inspection by tax authorities and judicial authorities, among others.

 Withholding service charges received by withholding agents may be used to improve their abilities of handling tax affairs and reward the personnel responsible for handling tax affairs.

Article 18 Withholding agents shall perform the obligations of withholding taxes in accordance with the law, and taxpayers shall not refuse. If taxpayers refuse, withholding agents shall report to the tax authorities in a timely manner.

Article 19 Withholding agents that fail to submit materials or information to the tax authorities as required, falsely declare and withhold special additional deductibles without basing on the information provided by taxpayers, fail to withhold taxes that should have been withheld, do not pay or underpay taxes withheld, or fraudulently use any other person's identity, among others, shall be handled in accordance with theLaw of the People's Republic of China on the Administration of Tax Collectionand other relevant laws and administrative regulations.

Article 20 The formats of relevant forms, certificates, lists and instruments in these Measures shall be developed and issued separately by the State Administration of Taxation.

Article 21 These Measures shall come into force on January 1, 2019, upon which the Notice by the State Administration of Taxation of Issuing theInterim Measures for the Administration of Filing of Individual Income Tax Withholding Returns for All Taxpayers in Full Amount(No. 205 [2005], SAT) shall be repealed.

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(All information in this document is authentic in Chinese. English is provided for reference only. In case of any discrepancy, the Chinese version shall prevail.)