China reforms the individual income tax and announces deductions for 2019

China reforms the individual income tax and announces deductions for 2019



The State Council, the Chinese Executive, announced the reform of the law that regulates the individual income tax and six special tax deductions for 2019, informs the state news agency Xinhua.

Chinese Premier Li Keqiang has signed a decree that includes "deductions for special expenses" and greater "tax incentives for qualified foreign talent," according to official information published last night.

The official media did not echo the tax incentives for the aforementioned foreign "talents", but did detail the areas covered by the new tax deductions: education of the children, ongoing training, treatments for serious illnesses, mortgage interest, rents and care for the elderly

According to the example cited by Xinhua, an average contributor to Beijing with a gross monthly income of 20,000 yuan (2,900 dollars, 2,550 euros) who is an only child, has a school-age child and parents over 60 years of age, rents a house and study a master's degree while working, pay income taxes of 800 yuan (116 dollars, 102 euros), 75% less.

"The range of deductions is so broad that most taxpayers can choose one or more," says the official information body.

In October, Beijing approved raising the minimum income threshold to pay the individual income tax from 3,500 yuan (507 dollars, 446 euros) per month to 5,000 yuan (724 dollars, 636 euros).

These taxes are the third in order of importance in the tax hierarchy, behind the value added tax (VAT) and corporate tax.

In 2017, taxes on individual income accounted for 8.3% of the total tax revenue, with an amount of about 1.2 trillion yuan (173,748 million dollars, 152,635 million euros).

The economic plans of China with a view to 2019 go through a continuation of the tax cuts, which this year have reached 1.3 trillion yuan (188.227 million dollars, 165.354 million euros).

With these measures, Beijing seeks to "boost economic growth" and "strengthen the adjustment policies for the correction of the negative cycle", with the aim of accommodating the weight of its economic progress on domestic demand and cushioning the effects of the slowdown and of the commercial war with the United States.

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