China Provides Details for Upcoming Personal Income Tax Cuts
Zhou Zhenjie
DATE:  Dec 24 2018
/ SOURCE:  yicai
China Provides Details for Upcoming Personal Income Tax Cuts China Provides Details for Upcoming Personal Income Tax Cuts

(Yicai Global) Dec. 24 -- The Chinese government wants to hand taxpayers a break on expenses in six areas including home mortgages, major medical treatments and children's education, according to plans detailing personal income tax reductions.

Under new rules coming in on Jan. 1, taxpayers or their spouses with mortgages on a first home can deduct CNY1,000 (USD145) per month from taxable income, the cabinet revealed on Dec. 22. Renters will be able to trim their taxable income by between CNY800 and CNY1,500 depending on the city where they live, with bigger cities offering the largest allowances.

The government announced in August that it would amend the existing tax law to reduce the burden on individuals. The new measures will help to spur consumption and boost domestic demand, a number of tax experts told Yicai Global.

Taxpayers can also deduct up to CNY80,000 (USD11,600) for self-funded medical treatments costing CNY15,000 or more, and subtract CNY2,000 a month for expenses on the care of the elderly or other legal dependents.

Both employers and their staff have responded positively to the news.

"The tax reform guarantees recruitment for enterprises," Chen Hongling, chairman of listed car parts maker Shanghai Baolong Automotive, told Yicai Global. "We made a preliminary calculation and about 62 percent of employees at our Songjiang base will not pay personal income taxes after the New Year."

Zhang Juan, a worker at the firm, will be able to deduct CNY2,000 from her taxable income each month for expenses on elderly family members, meaning she will not pay any income tax. Her husband will be able to match that with expenditure on their children's education and mortgage interest.

"When the threshold and rates for personal income tax were raised in October, I used the CNY210 (USD30.4) saved to buy phlebitis ointment for my mother," Zhang said, adding that her family will be CNY1,000 better off each month after factoring in the new deductions. "Saved over a year, that's enough to pay for a vacation."

Editor: James Boynton

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Keywords:   Individual Income Tax,Tax Cuts