Tax changes in China
06 December 2021
Ken Lee, Partner at Lee & Lee Associates, AGA's accounting firm member in Beijing updates us on the latest tax changes for the region.
RELEVANT LEGISLATIVE CHANGES:
a) Individual Income Tax
The tax-free allowances for expatriate’s housing, child education, laundry and meals shall expire by the end of 31 December 2021. Instead, expatriates shall enjoy the same tax-deduction benefits as local Chinese residents.
The tax-favourable bonus calculation method shall expire by the end of 31 December 2021. Any bonus should be combined with salaries or wages for annual individual income tax calculation purposes.
b) Corporate Income Tax:
The corporate income tax rate can be as low as 2.5%, 10% on taxable profit below RMB 1 million and the amounts between RMB 1 million and RMB 3 million. These are much favourable tax rates compared to the standard tax rate of 25%. This regulation is valid until the end of 31 December 2022.
c) Value-Added Tax:
The VAT rate shall be as low as 1% for small scale tax payers until the end of 31 December 2021.
The VAT shall be exempt if a small scale taxpayer’s monthly income is less than RMB 150,000. This regulation is valid until 31 December 2022.
For further information contact Ken Lee at Lee & Lee Associates - klee@lla.cc
About Lee & Lee Associates:
Lee & Lee Associates is a professional accounting and business consulting firm dedicated to providing high quality services in accounting, audit, tax, financial due diligence, investment consulting, and business establishment in China. Their clients represent foreign companies, joint ventures, wholly foreign owned enterprises, representative offices, and foreign individuals. Their professionals come from international accounting firms, multinational enterprises, fast-growing small and medium-sized companies and tax authorities. All of their partners are Chinese Certified Public Accountants with over 10 years of working experience. Apart from being CCPAs, some are also members of the Association of Chartered Certified Accountants (ACCA, UK), Chinese Certified Tax Accountants, Certified Internal Auditors and attorneys at law.