Wednesday, August 24, 2005
The State Council has proposed two amendments to the Individual Income Tax Law to the Standing Committee of the National People's Congress. The first simply raises the level of personal exemptions from 800 yuan/month to 1500 yuan/month. The second highlights an interesting feature of Chinese tax law of which I had not been aware: that many recipients of income are not legally responsible for paying taxes on that income. Instead, the employer is responsible for withholding the appropriate amount. If sufficient tax is not withheld, it is the employer that is responsible, and the tax authorities have no recourse against the recipient of the income. This apparently makes it easy for certain high-income individuals such as performers to avoid taxes. The second amendment will close this loophole.
- News report in Chinese
- News report in English (South China Morning Post; Lexis/Nexis access required)