To conscientiously implement the deployment of the Central Economic Work Conference, effectively safeguard the legitimate rights and interests of taxpayers, and help taxpayers smoothly and normatively complete the comprehensive income settlement and payment of individual income tax for the year 2023, the State Administration of Taxation has announced the specific content of the comprehensive income settlement and payment of individual income tax, as follows:
Announcement of the State Administration of Taxation on Handling the Comprehensive Income Settlement and Payment of Personal Income Tax for the Year 2023 (State Administration of Taxation Announcement No. 2 of 2024)
The announcement provides that Individual tax residents are obligated to summarize and file 4 categories of the comprehensive income sourced from wages/salaries, labor remuneration, authorship fees, and royalties for the Calendar year 2023.
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 payable of annual individual income tax (hereinafter referred to as “IIT”). Because the IIT is filed and prepaid in 2023, therefore the annual IIT filing could result in a tax refund or additional tax payable. The competent tax authorities shall then proceed with the tax refund or compensation thereafter.
The Annual IIT Return Filing does not involve certain categories of incomes such as rental income from property leasing, and other income not included in the comprehensive income according to regulations.
Submission time and mode
The Annual IIT Return Filing for the year 2023 shall be completed during the period from March 1st to June 30th 2024.
Taxpayers can choose the following methods to complete the IIT Return Filing:
（1）Self-declaration;
（2）Declared by the employer;
（3）Declared by authorized entities.
Self-declaration 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, please noted that the tax authority will provide the pre-filling service to taxpayers. In case it is not convenient to pursue the abovementioned methods, the filing can also be done by mailing the paper copy of annual income filing or go to the relevant tax service bureau in person.
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, supplement the comprehensive income obtained outside of the employment with the employer in 2023, 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 do it on the taxpayer’s behalf.
Exemptions
Where a taxpayer has declared and prepaid IIT in 2023 according to tax regulation and meets one of the following conditions, there is no obligation to carry out the Annual IIT Return Filing:
（1） Annual comprehensive income does not exceed RMB 120,000, even though additional tax is payable;
（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 under-declaration or non-declaration of comprehensive income is made in the middle of the year, the taxpayer should accordingly conduct the Annual IIT Return Filing in accordance with the law.
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 Individual Income Tax Return Filing, please contact us at info@phcadvisory.com.
PHC Advisory is a company of DP Group: an international professional services conglomerate of companies with approximately 100 experienced professionals worldwide. We offer comprehensive services in tax, accounting, and financial consulting, including financial supervision, financial audit, internal audit, internal control over financial reporting, and support for audited financial statements and annual audits, ensuring clients' financial transparency and compliance.
The content of this article is provided for informational purposes only, financial advice must be tailored to the specific circumstances on a case-by-case basis, and the contents of this article do not legally bind PHC Advisory with the reader in any way.
If you want to know more about doing business in China, please have a look at our previous articles:
+86 21 6256 7995
info@phcadvisory.com
