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China, People's Republic of Individual - Taxes on personal income

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Individuals who have a 'domicile or place of abode' in China are subject to individual income tax (IIT) on their worldwide income. Foreign individuals and residents of Hong Kong, Macau, and Taiwan, who are normally considered as non-China domiciled individuals, are taxed in accordance with their physical presence in China (see the Residence section for more information).

An individual is taxed in China on one's income by category. China's IIT law groups personal income into 11 categories. Each income category has its own tax rate(s), allowable deduction, etc.

The 11 categories of income are:

  1. Employment income (i.e. wages and salaries).
  2. Income from the operation of sole proprietorship.
  3. Income from the operation of a business on a contract or lease basis.
  4. Payment for labour services.
  5. Author's remuneration.
  6. Royalties.
  7. Interest, dividends, and profit distribution.
  8. Rental income.
  9. Income from transfer of property.
  10. Incidental income.
  11. Other taxable income as determined by the Ministry of Finance of the State Council.

Personal income tax rates

Employment income tax rates

Calculation of IIT on monthly employment income for wages and salaries is based on progressive tax rates (see the table below) using the following formula:

(Monthly gross taxable income x Tax rate) - Quick deduction

Monthly taxable income (CNY) (1)   Tax rate (%)  Quick deduction (CNY)
Grossed income Net income (2)
0 - 1,500 0 - 1,455 3 0
Over 1,500 - 4,500 Over 1,455 - 4,155 10 105
Over 4,500 - 9,000 Over 4,155 - 7,755 20 555
Over 9,000 - 35,000 Over 7,755 - 27,255 25 1,005
Over 35,000 - 55,000 Over 27,255 - 41,255 30 2,755
Over 55,000 - 80,000 Over 41,255 - 57,505 35 5,505
Over 80,000 Over 57,505 45 13,505

Notes

  1. Monthly taxable income after deducting the monthly standard deduction (see the Deductions section for more information).
  2. Where an individual's income tax liability is borne by the employer, the tax liability is calculated on a grossed-up basis (i.e. tax on tax).

Business income tax rates

Income earned by individuals from privately-owned businesses, sole proprietorship enterprises, or partnerships is generally subject to IIT at progressive rates from 5% to 35%, as follows:

Annual taxable income (CNY) Tax rate (%)
0 - 15,000 5
Over 15,000 - 30,000 10
Over 30,000 - 60,000 20
Over 60,000 - 100,000 30
Over 100,000 35

Tax rates for income derived from labour services

Labour service income is income derived from independent service activities such as design, medical practice, legal practice, consulting, etc. For income derived from labour services, IIT is calculated based on progressive tax rates ranging from 20% to 40%.

Monthly taxable labour service income (CNY) Tax rate (%)
0 - 20,000 20
Over 20,000 - 50,000 30
Over 50,000 40

Tax rates for other personal income

A flat rate of 20% is applied on the remaining categories of income, including royalties, incidental income, author's remuneration, rental income, interest income, dividends, and capital gains, unless specifically reduced by circulars issued by the SAT.

Local income taxes

There are no local taxes on personal income in China.

 


Last Reviewed - 21 July 2017

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