Implementing Regulations of the Individual Income Tax Law of the People's Republic of China

Implementing Regulations of the Individual Income Tax Law of the People's Republic of China


Implementing Regulations of the Individual Income Tax Law of the People's Republic of China

Order of the State Council [1994] No.142

January 28, 1994
 
Article 1 These Regulations are formulated in accordance with the Individual Income Tax law of the People's Republic of China (the "Tax Law").
 
Article 2 For the Purposes of the first paragraph of Article 1 of the Tax Law, the term "individuals who have domicile in China" shall mean individuals who by reason of their permanent registered address, family or economic interests, habitually reside in the People's Republic of China.
 
Article 3 For the purposes of the first paragraph of Article 1 of the Tax Law, the term "have resided for one year or move in China" shall mean to have resided within the People's Republic of China for 365 days in a Tax Year. No deductions shall be made from that number of days for Temporary Trips out of the People's Republic of China.
For the purposes of preceding paragraph, the term "Temporary Trips out of the People's Republic of China" shall mean absence from the People's Republic of China for not more than 30 days during a single trip, or not more than a cumulative total of 90 days over a number of trips, within the same Tax Year.
 
Article 4 For the purposes of the first and second paragraphs of Article 1 of the Tax Law, the term "income derived from sources within China" shall mean income the source of which is inside the People's Republic of China, and the term "from sources outside China" shall mean income the source of which is outside the People's Republic of China.
 
Article 5 The following income, whether the place of payment is inside the People's Republic of China or not, shall be income derived from sources inside the People's Republic of China.
(1) income from personal services provided inside the People's Republic of China because of the tenure of an office, employment, the performance of a contract, etc.;
(2) income from the lease of property to a lessee for use inside the People's Republic of China;
(3) income from the assignment of property such as buildings, land use rights, etc. inside the People's Republic of China or the assignment inside the People's Republic of China of any other property;
(4) Income from the licensing for use inside the People's Republic of China of any kind of licensing rights;
(5) income from interest, dividends and extra dividends derived from companies, enterprises and other economic organizations or individuals inside the People's Republic of China.
 
Article 6 For income derived from sources outside the People's Republic of China of individuals not domiciled in the People's Republic of China, but resident for more than one year and less than five years, subject to the approval of the tax authorities-in-charge, individual income tax may be paid on only that part which was paid by companies, enterprises or other economic organizations or individuals which are inside the People's Republic of China. Individuals who reside for more than five years shall, commencing from the sixth year, pay individual income tax on the whole amount of income derived from sources outside the People's Republic of China.
 
Article 8 The scope of the categories of income mentioned in Article 2 of the Tax Law shall be as set forth below:
(1) The term "income from wages and salaries" shall mean wages, salaries, bonuses, year-end extras, profit shares, subsidies, allowances and other income related to the tenure of an office or employment that is derived by individuals by virtue of the tenure of an office or employment.
(2) The term "income from production or business operation derived by individual industrial and commercial households" shall mean the following:
(a) income derived by individual industrial and commercial households from engagement in industry, handicrafts, construction, transportation, commerce, the food and beverage industry, the service industry, the repair industry and production and business in other industries;
(b) income derived by individuals from engagement, with approval from the relevant government authorities and after having obtained licenses, in the provision of educational. medical, advisory and other services activities for consideration;
(c) other income derived by individuals from engagement in individual industrial and commercial production and business;
(d) all taxable income related to production and business of the above individual industrial and commercial households and individuals.
(3) The term "income from contracted or leased operation of enterprises or institutions" shall mean income derived by individuals from contracted or leased operations, or from assigning such contracts or leases, including income of a wage or salary nature derived by individuals on a monthly basis or from time to time.
(4) The term "income from remuneration for personal services" shall mean income derived by individuals from engagement in design, decoration, installation, drafting, laboratory testing, other testing, medical treatment, legal accounting, advisory, lecturing, news, broadcasting, translation, proofreading, painting and calligraphic, carving, moving picture and television, sound recording, video recording, show, performance, advertising, exhibition and technical services, introduction services, brokerage services, agency services and other personal services.
(5) The term "income from author's remuneration" shall mean income derived by individuals by virtue of the publication of their works in books, newspapers and periodicals.
(6) The term "income from royalties" shall mean income derived by individuals from provision of the right to use patent rights, trademark rights, copyrights, non-patented technology and other licensing rights, Income from provision of the fight to use copyrights shall not include income from author's remuneration.
(7) The term "income from interest, dividends and extra dividends" shall mean income from interest, dividends and extra dividends that is derived by individuals by virtue of their possession of creditor's rights and share rights.
(8) The term "income from lease of property" shall mean income derived by individuals from the lease of buildings, land use rights, machinery, equipment, means of transportation and other property.
(9) The term "income from transfer of properly" shall mean income derived by individuals from the assignment of negotiable securities, share rights, structures, land use rights, machinery, equipment, means of transportation and other property.
(10) The term "contingent income" shall mean income derived by individuals from winning awards, prizes and lotteries and other income of an occasional nature.
Income derived by individuals for which the taxable category is difficult to determine shall be decided upon by the tax authorities-in-charge.
 
Article 9 Measures for the levy and collection if individual income tax on income from the transfer of shares shall be separately formulated by the Ministry of Finance and implemented upon approval by the State Council.
 
Article 10 Taxable income derived by individuals shall include cash, physical objects and negotiable securities.
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