The year of 2022 has past and from January 1st, 2022, to December 31st, 2022, individual taxpayers need to summarize and file 4 categories of the comprehensive income from wages /salaries, labor remuneration, authorship fees, and royalties. 

After the standard deduction of RMB 60,000 and the other permitted deductions determined according to the relevant tax regulations, the individual income tax rate of comprehensive income shall be applied to calculate the annual individual income tax (hereinafter referred to as “IIT" ) payable. The tax prepaid in 2022 shall then be deducted to obtain the net tax refundable or remaining payable amount. The competent tax authorities shall then proceed with the tax refund or compensation thereafter.

The Annual IIT Return Filing does not involve certain classified incomes such as from property leasing, and other income not included in the comprehensive income according to regulations.

Where a taxpayer has prepaid IIT in 2022 according to tax regulation and meets one of the following conditions, it is not necessary to carry out the Annual IIT Return Filing:

（1） Annual comprehensive income does not exceed RMB 120,000, even though additional tax payment is needed;

（2） Additional tax payable is no more than RMB 400;

（3） The prepaid tax amount is consistent with the tax payable for Annual IIT Return Filing;

（4） Those who meet the conditions for a tax refund but will not apply for a tax refund.

However, if the comprehensive income is not fully declared or not declared at all during the tax year, the taxpayer shall prepare the Annual IIT Return Filing.

The Annual IIT Return Filing shall be submitted from between March 1st to June 30th in the subsequent year. Non-resident taxpayers in China who will leave China before March 1st shall complete the filing before leaving the country.

The Tax Bureau has launched a reservation service: taxpayers who need to complete the early IIT Return Filing (from March 1st to March 20th) can request an appointment for any day within the abovementioned timeframe through the Individual Income Tax APP and website after February 16th. From March 21st to June 30th, taxpayers can complete it at any time without making an appointment.

Taxpayers can choose the following methods to complete the IIT Return Filing:

（1）Self-filing;

（2）Filing completed by the employer;

（3）Filing completed by authorized entities.

For cases where the Annual IIT Return Filing is completed by the employer and other authorized entities, the taxpayer shall confirm with the relative employer/authorized entity in written or electronic form before April 30th, 2023, supplement the comprehensive income obtained outside of the employment with the employer in 2022, as well as relevant deductions, tax preferences and other information, and be responsible for the authenticity, accuracy and completeness of the information submitted. If the taxpayer has not confirmed with the employer or other entities to do it on his/her behalf, the employer or other entities shall not complete it on the taxpayer’s behalf.

Taxpayers have priority to complete the Annual IIT Return Filing through the mobile Individual Income Tax APP and the website of the Natural Individual Electronic Tax Bureau, you should also be aware that the tax authority will provide the pre-filling service for taxpayers. In case it is not convenient to pursue the abovementioned methods, the filing can also be completed by mailing the paper copy of annual income filing or completing the filing at the relevant tax service bureau in person.

At PHC Advisory, we are able to offer your business in China full support on relevant compliance matters, or any other issues your business may face in China. If you would like to know more about the procedures of Annual Induvial Income Tax Return Filing, please contact us at info@phcadvisory.com.