Understanding various tax services in China can go a long way in ensuring individuals comply with taxation rules and regulations. This article takes you through what the Individual Income Tax (IIT) is and how various individuals pay the income tax.
What is Individual Income Tax?
The IIT in China is a tax imposed on one’s salaries and wages, income from royalties and income from remuneration for personal services taxable annually. The IIT is important since the Chinese State of Administration of Taxation can reconcile the paid tax versus the tax payable. China tax services on IIT stipulates the amount one should pay annually as individual income tax depending on the amount earned. So, let’s discuss the taxable income to understand the amount various individuals should pay.
Taxable Income in China
The Individual Income Tax is arrived at after consolidating what one earns in salary, wages, royalties and remunerations annually. This comprehensive income ranks individuals to be taxed at different rates. The table below shows how individuals with different cumulative taxable incomes should pay IIT.
China tax services provide several deductions that help reduce the amount paid in the form of income tax. First, there’s a standard deduction of RMB 5,000 that’s offered every month. This deduction helps in reducing the taxable income of various individuals. In addition, individuals can benefit from the special itemized deductions. These deductions will consider individuals with various expenses like children’s education, continuing education, interests on mortgages, medical bills for critical illnesses, housing rental and expenditures on dependent elderly. Ensure you understand clearly the amount you’ll enjoy as tax deductions if you fall under any of these categories.
Exemptions on Annual IIT Filing
Individuals can enjoy exemptions from income tax if their annual comprehensive income doesn’t go beyond RMB 120,000. Similarly, individuals won’t file their IIT if their annual reimbursement doesn’t go beyond RMB 400. If an individual’s comprehensive tax goes beyond the amount mentioned, the individual should pay IIT depending on the given rates.
Conclusion
When it comes to Income Tax in China, individuals should understand China tax services when paying their income taxes. Visitors should consult experts to get updates about various tax services in China as they differ according to the amount earned. For example, the income tax in China has various rates that apply to different cumulative taxable incomes. Moreover, individuals should understand instances when they should enjoy deductions and annual filing exemptions.
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