The revised law of individual income tax (IIT) has been effective since last year. After a year of implementation, the final settlements and payments of IIT in 2019 will begin soon. Let’s check whether you need to pay more tax or will get a refund. 

On Dec 31, 2019, China’s State Taxation Administration (STA) released the Announcement of the Final Settlements and Payments of Individual Income Tax on the Annual Comprehensive Income in 2019. 

 

To know more about the individual income tax, please check our previous articles  

 

• China’s Six-year Rule for Foreigners Affects You Now! 

• New Rule! Foreigners Can Avoid to Be Chinese Resident Taxpayers! 

• New Measures Let You Pay Less Individual Tax In China! 

WHAT’S IIT SETTLEMENT? 

According to the announcement, taxpayers are required to make a settlement during the period between March 1 and June 30. 

 

They need to calculate their annual IIT payable, then deduct their prepayment to get the annual amount of the tax refund or payment and make a declaration to the authorities. 

 

 

In other words, if your IIT prepayment exceeds your actual IIT payable for the whole year, you can get a refund; otherwise, you need to pay the unpaid tax to settle. 

 

 

 

SHOULD I SETTLE? 

 

Generally, all taxpayers are required to make the settlement as long as their prepayment is not equal to their tax payable.

 

However, the government has issued a list of those who don’t need to settle to lower the tax burden. 

 

So you don’t have to make a tax settlement if you meet any of the following conditions: 

 

• Need to pay the tax but the annual comprehensive income is less than 120,000 yuan;
  

• Need to pay the tax but the amount of the payable is less than 400 yuan; 

• The prepayment is equal to the annual tax payable, or you don’t apply for the refund. 

 

 

HOW TO CALCULATE? 

Well first, you need to get clear your annual comprehensive income, including: 

 

• Employment income 

• Remuneration for personal services
  

• Author’s remuneration

• Royalties

 

Then deduct the standard basic deduction (60,000 yuan), specific deductions, additional deductions, and charitable contributions to get the taxable income. 

△ 6 types of additional deduction. Tap the pic to know more! 

After the multiplication by an applicable tax rate and deduction of the quick deduction, you’ll get the annual IIT payable. 

 

© Image | china-briefing

The tax refund or the tax payment is the difference between your annual tax payable and the tax prepayment. 

 

 

WHEN TO DO IT? 

 

Taxpayers need to make the annual settlement for 2019 during the period between March 1 and June 30, 2020. 

 

For those who have no domicile in China and will leave the country before March 1, 2020, they can settle the tax before the departure. 

 

WHAT IF I DON’T DO IT? 

As we said above, the settlement makes you pay the individual income tax your actually need to pay. 

 

If you fail to make a tax settlement while you’re required, apparently, that’s tax evasion. And your tax credit will be affected. 

In serious cases, violators are not allowed to leave China, and get fined even go to jail. 

 

Related article: Banned Leaving China for Violating These! 

 

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SOURCE | China Gov / Xinhua / Chinanews

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