The Ministry of Finance ("MOF") and the State Administration of Taxation ("SAT") have recently issued the Implementing Regulations of the Law of the People's Republic of China on Individual Income Tax (Revised Draft for Comment) (the "Revised Draft for Comment") and the Interim Measures on Additional Special Deductions for Individual Income Tax (Draft for Comment) (the "Draft for Comment"), to seek public comments by November 4, 2018.
The Revised Draft for Comment, compared with the former version of the implementing regulations, introduces revisions to 25 articles, removes 19 articles and adds 19 new articles. Revisions proposed this time touch upon the improvement to taxpayer-related provisions, the improvement to the scope of China-sourced income, the improvement to the scope of taxable income, the inclusion of anti-tax evasion articles, and the improvement to rules concerning tax collection and administration. The Draft for Comment clarifies respective principles and standards, for the extra deduction of six special types of fees, namely child education tuition, continuing education fee, medical expenses for a serious disease, mortgage interest, housing rent, and elderly care fee. For expenses borne by taxpayers for the preschool education and degree education received by their children, for example, a fixed deductible amount of CNY12,000 per annum or CNY1,000 per month is set for each child.