Chinese lawmakers drafted an amendment on personal income tax on Tuesday, suggesting that the threshold for individual income tax will rise from RMB3,500 to RMB5,000, according to China Daily.
The proposed changes mean that taxation may now cover all individual income, including revenue from personal services, and even royalties earned by writers or musicians — a first for China.
Additionally, the draft states that expenses including interest on housing loans and rent for housing, youth and continued education and medical costs related to serious disease will all be tax-deductible.
A new anti-avoidance clause, and improvements to the taxing structure are among the other potential changes. Anti-avoidance legislation aims to invalidate tax benefits received on transactions – or a series of transactions – that are intended for no other valid reason than to obtain a reduction, delay or avoidance of tax.
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There have now been a total of seven amendments to the code since the Individual Income Tax Law was written in 1980. At the time, it was an unprecedented move in Chinese history.
China Daily reports that, according to Ministry of Finance data, there was a 10.7 percent increase in China’s tax revenue from 2016 to 2017 — up to a whopping RMB14.4 trillion. During the same time period, personal tax revenue increased by RMB1.2 trillion, or 18.6 percent.
These figures coincide with China’s reported economic growth of 6.9 percent in 2017— a number that has been questioned by many experts.
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