Individual Income Tax Law of the People's Republic of China 

                                                           1994.01.01

STANDING COMMITTEE OF THE NATIONAL PEOPLE'S CONGRESS INDIVIDUAL INCOME

TAX LAW OF THE PEOPLE'S REPUBLIC OF CHINA　(Adopted　at the Third Session of the Fifth National People's Congress on　September 10, 1980, revised according　to　the　"Decision on the Amendment of　the　Individual Income Tax Law of the People's　Republic of China"　taken　at　the fourth meeting  of the Standing Committee　of the Eighth　National　 People's　Congress　on　October　31, 1993 to be effective　on　the January 1, 1994)
　

Article 1. Individuals who reside in the territory of China for a full year or more no matter having or having not a residence therein shall　pay individual　income tax according to this law on the　income gained within or outside the territory of China. Individuals who have no residence　and do not reside in China or those who have　no residence but live in China for less than a year shall pay individual income tax according to this law on the income gained　within the territory of China.
　

Article　 2.　 Individual　income　tax　shall　be levied on the following categories of income:
1. Income from wages and salaries;
2. Income　derived　from　production　and　business　operations　by individual

households engaging in industry and commerce;
3. Income derived　from　contracting　or　leasing　operations　by  enterprises or institutions;
4. Income from remuneration for personal services;
5. Income from remuneration to authors;
6. Income from royalties;
7. Income from interests, dividends and extra dividends;
8. Income from lease of property;
9. Income from transfer of property;
10. Chance income; and
11. Other kinds of income specified as　taxable　by　the financial department of the State Council.

Article　 3. Individual income tax rates:
　      1. Income from wages and salaries in excess of specified amounts shall be taxed at　progressive tax rates ranging from 5% to 45% (for specific rates, see table 1 attached).
　      2. Income derived from production and business operations by individual households engaging in industry and commerce in excess of specified amounts shall be taxed at progressive rates ranging from 5% to 35%　(for specific rates, see table 2 attached)
　      3. Income derived　from remuneration to authors shall be taxed at the proportional tax rate of 20% but with a reduction of 30% of the taxable amount.
　      4. Income　derived　from　remuneration for personal services shall be taxed at the proportional tax rate of 20%. In case where a single remuneration for the services is extremely high, additional tax may be levied. The specific methods of taxation shall be worked out by State Council separately. For incomes from royalties, interests, dividends and extra dividends, leasing property, transfer of property, chance income and other incomes, a proportional tax rate of 20% shall be applied.
　

Article　4.　The　following　categories of incomes shall be exempted from individual income tax:
　      1. Awards granted by provincial people's governments, ministries and commissions under the State Council and units of the Chinese People's  Liberation Army above the division or foreign Organizations and international organizations for achievements in science, education, technology, culture, public health, sports and environmental protection.
　     2. Interests derived from bank savings,　State treasury bonds and financial bonds issued by the State.
        3. Subsidies and allowances issued in an unified manner by the State.
　    4. Welfare　benefits, pension cost for the disabled and for survivors and relief payments.
        5. Insurance proceeds.
　    6. Military  severance  pay and decommission or  demobilization pay for cadres and soldiers of the armed forces.
　   7. Resettlement  pay,  serverance  pay, retirement  pay, pension  retired pay and retirement living  allowances for　cadres and　workers  according　to State unified stipulations.
　     8. Income of diplomatic representatives, consulate officials and other people of foreign embassies and consulates in China who enjoy tax concessions according to relevant laws of China.
　     9. Income exempted from tax as stipulated in the international conventions to which the Chinese gover--nment is a party and in agreements it has signed.
　     10. Income approved as tax-free by the financial department of the State Council.