Implementation details of new Individual Income Tax filings in China

In October 2018, the National People’s Congress of the People’s Republic of China published their Interim Measures for Additional Special Deductions for Individual Income Tax filings (Draft Seeking Opinions).


The draft consists of 32 articles which cover all eligible deductions and exemptions, as well as eligibility criteria and claimant responsibilities.


On December 13th, 2018, The PRC Tax Bureau published further implementation details regarding the new Individual Income Tax laws, which are effective from January 1st, 2019, onwards. We would like to draw your attention towards several pertinent points from the interim measures, given that these may present significant savings potential to many taxpayers. The interim measures outline six categories for additional special deductions from Individual Income Tax that taxpayers may take advantage of. The categories are as follows:



Children’s Education
Relevant Section: Article 5

Expenses related to full time education for children can be deducted up to ¥1,000.00, for each child, every month


Continuing Education
Relevant Section: Article 8




Adults pursuing educational qualifications at local educational institutions in mainland China may deduct up to ¥400.00 per month for the duration of their study program, as long as this period does not exceed 48 months.
Professional qualification programs are eligible for a deduction of up to ¥3,600.00 in the year that the certification is completed.


Medical Treatment for Critical Illnesses
Relevant Section: Article 11


Medical expenses paid by the individual after insurance reimbursement, if in excess of ¥15,000.00 can be deducted up to ¥80,000.00 when the bill payments are finalized.



Home Mortgage Interest
Relevant Section: Article 14


First time home owners can deduct up to ¥1,000.00 per month during tax years when they incur interest on their mortgage. This deduction is only applicable to first time home purchases for individuals or married couples, and has a limit of 240 months, or 20 years.


Rental Housing
Relevant Section: Article 17



Individuals renting a residential unit in the city where they work, if they do not already own a home in the area, may deduct up to ¥1,500.00 in major cities (Cities under direct administration of Central Government, regional or capitals, places with a population of over 1 million) and up to ¥1,100.00 in all other cities.


Elderly Support
Relevant Section: Article 22



Expenses related to supporting elderly dependents paid by a taxpayer can deduct up to ¥2,000.00 per month for single children. If the taxpayer has siblings, the deduction can be split, settled by agreement, or decided by the dependent. This deduction arrangement may not be changed within a single tax year.




Last but not least, Article 25 states that first time claimants are responsible for providing their local authorities with the necessary documentation and information as soon as they are available, during the period when they seek the deduction. Individuals will be held responsible for the accuracy of their claims and are expected to fully disclose all relevant information.


You can click the below link to read all 32 articles of the Measures (Chinese only):


At Fung, Yu & Co. CPA, we are committed to helping you make the most of your eligible deductions so you can file your PRC Individual Income Tax with the greatest confidence this year. Please don’t hesitate to contact us for a consultation so we can maximize your benefits and lighten the load of any potential liabilities.


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