Detailed Rules for the Implementation of the Individual Income Tax Law of the

 People's Republic of China 

1994.01.28 

STATE COUNCIL OF CHINADETAILED RULES FOR THE IMPLEMENTATION OF THE INDIVIDUAL INCOME TAX LAW OF THE PEOPLE'S REPUBLIC OF CHINA (Promulgated according to the order No.142 of the State Council of the P.R.C. on January 28, 1994 and became effective on the same day) 　　

Article 1 The rules are formulated in accordance with the Individual Income Tax Law of the　People's Republic of China　(hereinafter referred to as the "Tax Law"). (Pls refer to CEN No.50 of Dec.27, 1993 for the Tax Law)

Article 2 Individuals who reside in the territory of China mentioned in Section 1 of Article 1 of the Tax Law mean individuals who have habitually resided in China because of household registration, family or economic involvements. 　　

Article 3 Individuals who stay in China for a full year mentioned in Section 1 of Article 1 of the　Tax Law mean individuals who have stayed in China for 365 days in a tax year. Days for temporary leaves　 from Chinese territory shall be included in the calculation of　the　total days. The　temporary　leaves　 from the territory of China mentioned above mean one time leave of not exceeding 30 days or multiple leaves of not exceeding of a total of 90 days from the territory of China within a tax year.

Article 4 Income derived from within the territory of China mentioned in Section 1 and 2 of　Article 1 of the Tax Law means income derived from sources within the territory of China; income derived outside China means income derived from sources outside the territory of China. 　

Article　5 The following categories of income, regardless whether or not payments be made　 within China, shall be considered income derived from sources within the territory of China: 　

(1)　Income derived from on job, employed or contracted labor service performed within the territory of China;

(2)　Income derived from leasing of property to others for use within the territory of China; 　

(3)　Income derived from transfer of buildings, land use rights or other property within the territory

 of China; 　

(4) Income derived from granting of various franchises to be used within the territory of China; and 　(5)　Income derived from interests, dividends and extra dividends from companies, enterprises and

　 other economic organizations or individuals within the territory of China. 　

Article　6　Individuals who have no residence in China but have stayed in China for over one year　but not exceeding five years, with approval of the tax authorities,　shall pay individual income tax on　that part of their income derived from the companies, enterprises, other economic organizations or　individuals within the territory of China; individuals who have stayed in China for more than five years　shall pay individual income tax on all their income derived outside China from the sixth year. 　　

Article　7　Individuals who have no residence in China but who have stayed in China　 continuously or accumulatively not exceeding 90 days in a tax year shall be exempted from tax on the　 part of their income derived within the territory　of China but paid by employers outside China and the　 payment not coming from the latter's institutions or places within the territory of China. 　　

Article　 8　The scope of the categories of income mentioned in Article 2 of the Tax Law is as follows: 　

(1)　Income derived from wages and salaries means income from wages, salaries, awards, yearend

extra dividends, labor dividends, allowances, subsidies and other remunerations from their job

or other income related with their employment; 　　

(2)　Income derived from production and business operations by individual households engaging

in industry and commerce means: 　　  

1. Income derived from production and business operations by individual households　　　engaging in manufacturing, handicraft, construction, communications and transportation, commerce, catering, service,　repair and other industries; 　

2. Income derived by individual from running school, medical　service, consultation and other　

paid services upon　approval or license granted by related government departments; 　

3. Income derived from　production　and business　operations　by other individuals; and 　　　

4. Other taxable income related with production and business operations obtained by individual households engaging in industry and commerce　and individuals mentioned above. 　　

(3)  Income　derived from contracting or leasing　operations of enterprises and institutions means income obtained by individuals from operations of contracting, leasing, subcontracting and　transfer of leasing　rights,　including　the monthly or　individual payments of wage and salary nature. 　　

(4) Income derived from labor services means income derived　from designing, decoration,　　installation, drafting, chemical examination, testing, medical practice,　law practice, accounting,　consulting, lecturing, news reporting, broadcasting, translating, proof-reading, calligraphy　　and painting, sculpture, films, audio and video recording, performing, advertisement, exhibition,　technical service, go-between service, brokerage, commissioned service and other labor services. 　  

(5) Income derived　from　remuneration　to　authors　means　income derived from　 written　works of individuals after published　in books, newspapers or journals. 　　

(6) Income derived from royalties means income derived from providing and assigning patent rights,　copyrights, rights to use proprietary technology and other rights; income from providing copyrights excludes remuneration to authors.

(7)　Income　derived　from　interests,　dividends and extra dividends means income derived from　interests, dividends and extra dividends from the ownership of bonds and stocks. 　

(8)　Income　 derived from leasing of property means　income　derived by　 individuals　 from leasing of their buildings,　 land　 use rights,　machinery　and　equipment,　motor　vehicles and ships and other property. 　

(9) Income derived from transfer of property means income derived by　individuals from　　transfer of securities, stocks, buildings, land　use rights, machinery and　equipment,　motor　vehicles and ships　and other property. 　

(10) Chance income　means　income　derived　by　individuals from rewards, winning prize in lotteries and other windfalls. When it is difficult to define　the category of taxable　individual　 income, the　tax　authorities shall　make　the determination. 　

Article　　9 The　procedures　for　levy of individual income tax on gains from　transfer　of　 stocks　shall　be　formulated　separately　by the　Ministry　of　Finance　and　implemented after approval of the State Council. 　　

Article  10 Taxable　individual　income includes income in cash, in kind and in　　securities.　　For　income　in kind, the taxable income shall be calculated on the price　provided　by certificates;　when　there is　 no　certificate for income in kind or the　price　provided　by　certificates　　is　obviously　over　low,　the taxable　 income　 shall　be　determined　 based　on　 the local　market price　checked and　ratified by the tax　authorities.　For　income in securities,　the　taxable　income　shall　be　checked and　ratified　 by　  the　tax authorities based on the par value and the market price.