Year-end bonus tax policy extended to 2021

After the implementation of the new tax law, can the year-end bonus enjoy the previous tax benefit? The Ministry of Finance and the State Administration of Taxation issued a notice on the 27th, and the individual residents obtained a one-time bonus for the whole year, which is in compliance with the "Notice of the State Administration of Taxation on Adjusting the Individual's One-Time Bonus for Calculating the Individual Income Tax Method", in 2021. Before December 31st, the comprehensive income of the current year will not be incorporated. The annual one-time bonus income will be divided by the amount obtained in 12 months. According to the monthly comprehensive income tax rate table, the applicable tax rate and the quick deduction will be determined. .

Notice on the convergence of preferential policies after the revision of the Individual Income Tax Law

Finance and Taxation [2018] No. 164

The provinces, autonomous regions, municipalities directly under the Central Government, the municipal finance bureaus (bureaus), the provincial tax bureaus, the provinces, autonomous regions, municipalities directly under the central government, the municipal tax bureaus, and the finance bureau of the Xinjiang Production and Construction Corps:

In order to implement the revised Individual Income Tax Law of the People's Republic of China, the relevant matters concerning the convergence of personal income tax preferential policies are hereby notified as follows:

I. Policy on the one-off bonus for the whole year, the annual performance salary of the head of the central enterprise, the deferred cashing income and the tenure award

(1) The individual's individual obtains a one-time bonus for the whole year, which is in compliance with the “Notice of the State Administration of Taxation on Adjusting the Individual's Method of Calculating the Individual Income Tax for the One-Time Bonus of the Year” (Guo Shui Fa [2005] No. 9), at 2021 Before December 31 of the year, the consolidated income tax rate (hereinafter referred to as the monthly tax rate table), which is not included in the current year’s comprehensive income, divided by the annual one-time bonus income divided by 12 months, according to the monthly conversion attached to this notice (hereinafter referred to as the monthly tax rate table) , determine the applicable tax rate and quick deduction, and calculate the tax separately. The calculation formula is:

Tax payable = one-time bonus income for the year × applicable tax rate - quick deduction

Resident individuals can obtain a one-time bonus for the whole year, and they can also choose to incorporate the comprehensive income of the year to calculate the tax.

From January 1st, 2022, individual residents will receive a one-time bonus for the whole year, which should be included in the comprehensive income of the year to calculate and pay personal income tax.

(II) The person in charge of the central enterprise obtains the annual performance salary deferred cashing income and term award, which is in line with the Notice of the State Administration of Taxation on the Issue of Individual Income Tax on the Deferred Cashing Income and Term Reward of the Annual Performance Salary of the Head of the Central Enterprise (Guo Shui Fa [2007] The provisions of No. 118) shall be implemented in accordance with Article 1(1) of this Notice before December 31, 2021; the policies after January 1, 2022 shall be separately clarified.

2. Policy on equity incentives for listed companies

(1) Resident individual obtains equity incentives such as stock options, stock appreciation rights, restricted stocks, equity awards (hereinafter referred to as equity incentives), and is in compliance with the Notice of the Ministry of Finance and the State Administration of Taxation on the Collection of Individual Income Taxes on Individual Stock Option Income (Civil Taxation) [2005] No. 35), Notice of the Ministry of Finance and the State Administration of Taxation on the Relevant Issues Concerning the Collection of Individual Income Tax on Income from Stock Appreciation Rights and Restricted Stocks (Cai Shui [2009] No. 5), and the State Administration of Taxation of the Ministry of Finance on National Autonomy Notice of the Innovation Pilot Area on the Promotion of Tax Pilot Policies to National Implementation (Cai Shui [2015] No. 116), Article 4 of the Ministry of Finance and the State Administration of Taxation on Improving the Income Tax Policies for Equity Incentives and Technology Shares (Finance and Taxation [2016 】 No. 101) Article 4 (1) of the relevant conditions, before December 31, 2021, not to be integrated into the current year's comprehensive income, the full amount of the comprehensive income tax rate table is applied separately, and taxation is calculated. The calculation formula is:

Tax payable = equity incentive income × applicable tax rate - quick deduction

(2) If a resident individual obtains more than two (including two) equity incentives within one tax year, he shall combine the taxation in accordance with the provisions of Item (1) of Article 2 of this Notice.

(3) The equity incentive policy after January 1, 2022 is separately clarified.

3. Policy on the commission income of insurance salespersons and securities brokers

The commission income obtained by insurance salespersons and securities brokers is the income from labor remuneration. The balance after deducting 20% ​​of the income excluding VAT is the amount of income, the amount of income minus the cost of exhibition industry and additional taxes and fees. Enter the comprehensive income of the current year and calculate and pay personal income tax. The cost of exhibition sales for insurance marketers and securities brokers is calculated at 25% of the income.

When the withholding agent pays the commission income to the insurance salesperson or securities broker, it shall calculate the prepayment according to the accumulative withholding method stipulated in the “Administrative Measures for the Deduction of Individual Income Taxes (Trial)” (No. 61 of the State Administration of Taxation Announcement 2018) Tax deduction.

4. Policy on personal receiving enterprise annuity and occupational annuity

The individual meets the retirement age set by the state, and the enterprise annuity and occupational annuity received are in accordance with the “Notice on the Issues Concerning the Individual Income Tax on the Enterprise Annuity Employment Annuity” issued by the Ministry of Finance and Human Resources and Social Security of the Ministry of Finance (Cai Shui [2013] No. 103). , not into the comprehensive income, the full amount of tax payable. For those received monthly, the monthly tax rate table shall be used to calculate the tax payment; for the quarterly, the average apportionment shall be included in each month, and the monthly tax rate shall be calculated according to the monthly tax rate; if it is received annually, the comprehensive income tax rate table shall be used to calculate the tax.

The individual's personal account funds that are collected at one time due to the settlement of the individual, or the individual account balance of the annuity received by the designated beneficiary or legal heir after the individual dies, shall be calculated and paid according to the comprehensive income tax rate table. If the individual receives the funds or balance of the annuity personal account in addition to the above special reasons, the monthly tax rate table shall be used to calculate the tax payment.

V. Policy on one-time compensation income for terminating labor relations, early retirement, and internal retirement

(1) The individual and the employer terminate the labor relationship and obtain one-time compensation income (including the economic compensation, living allowance and other subsidies paid by the employer), and the part of the local average salary of the previous year is less than 3 times. Personal income tax; the portion that exceeds 3 times the amount is not included in the comprehensive income of the current year, and the comprehensive income tax rate table is applied separately to calculate the tax payment.

(2) The one-time subsidy income obtained by an individual for early retirement procedures shall be apportioned according to the actual annual number between the early retirement procedures and the statutory retirement age to determine the applicable tax rate and the quick deduction, and the comprehensive income tax rate table shall be applied separately. Calculate taxes. Calculation formula:

Tax payable = {[(one-time subsidy income 实际 the actual number of years of early retirement to the statutory retirement age) - fee deduction standard) × applicable tax rate - quick deductions × × the actual year of early retirement to the statutory retirement age number

(3) The one-off subsidy income obtained by an individual for internal retreat procedures shall be calculated in accordance with the “Notice of the State Administration of Taxation on Relevant Policy Issues Concerning Individual Income Tax” (Guo Shui Fa [1999] No. 58).

Sixth, the policy of selling units to employees at low prices

The unit sells the house to the employees at a price lower than the purchase or construction cost, and the difference between the employees and the consumables is in accordance with the Notice of the Ministry of Finance and the State Administration of Taxation on the Individual Income Tax Issues Concerning the Low Price of Units Sold by the Staff (Cai Shui [2007] Article 23) If the provisions of Article 2 are not incorporated into the comprehensive income of the current year, the difference income shall be divided by the amount obtained in 12 months, and the applicable tax rate and the quick deduction shall be determined according to the monthly tax rate table, and the tax shall be calculated separately. The calculation formula is:

Tax payable = the difference between the purchase price actually paid by the employee and the price of the purchase or construction cost of the house × applicable tax rate - quick deduction

7. Policies on foreign subsidies for foreign individuals

(1) During the period from January 1, 2019 to December 31, 2021, if the foreign individual meets the individual conditions of the resident, they may choose to enjoy the special deduction of personal income tax, or they may choose to follow the “Regulations of the Ministry of Finance and the State Administration of Taxation on Individual Income Tax”. Notice of the Problem (Cai Shui [1994] No. 20), Notice of the State Administration of Taxation on the Implementation of the Relevant Issues Concerning the Exemption and Exemption of Individual Income Taxes by Foreign Individuals (Guo Shui Fa [1997] No. 54) and the Ministry of Finance and the State Administration of Taxation on Foreign Residents The Notice of Individuals Obtaining Individual Income Taxes for Housing and Other Subsidies in Hong Kong and Macao (Cai Shui [2004] No. 29) stipulates that they enjoy preferential subsidies for subsidies such as housing subsidies, language training fees, and children's education fees, but they may not enjoy them at the same time. Once a foreign individual has chosen, it must not be changed during a tax year.

(2) From January 1st, 2022, foreign individuals will no longer enjoy housing subsidies, language training fees, and children's education subsidies and tax exemption policies, and should enjoy special additional deductions as required.

8. In addition to the above-mentioned convergence items, other personal income tax preferential policies will continue to be implemented in accordance with the original documents.

9. This notice shall be implemented as of January 1, 2019. The following documents or terms of the document are repealed at the same time:

(1) Article 1 of the Circular of the Ministry of Finance and the State Administration of Taxation on the Collection and Exemption of Individual Income Tax on One-off Compensation Income Obtained by Individuals and Employers in Dissolving Labor Relations (Cai Shui [2001] No. 157);

(2) Notice of the Ministry of Finance and the State Administration of Taxation on the Collection of Individual Income Tax on the Income of Individual Stock Options (Cai Shui [2005] No. 35), Article 4 (1);

(3) Article 3 of the Circular of the Ministry of Finance and the State Administration of Taxation on the Individual Income Tax Issues Concerning the Unit Selling a House to Staff at Low Price (Cai Shui [2007] No. 13);

(4) Notice of the Ministry of Finance, Ministry of Human Resources and Social Security, State Administration of Taxation on the Relevant Issues Concerning the Individual Income Tax on Enterprise Annuity Occupational Pensions (Cai Shui [2013] No. 103), Article 3, Items 1 and 3;

(5) Notice of the State Administration of Taxation on the Issues Concerning the Collection of Individual Income Taxes on the Discounts or Subsidy Incomes Obtained from Employers by Individuals Subscribing to Stocks and Others (Guo Shui Fa [1998] No. 9);

(6) Notice of the State Administration of Taxation on the Issue of Individual Income Tax on Income Obtained by Marketers (Non-Employees) of Insurance Enterprises (Guo Shui Fa [1998] No. 13);

(7) Circular of the State Administration of Taxation on the Issue of Individual Income Tax on Individuals Receiving Economic Compensation for Dissolving Labor Contracts (Guo Shui Fa [1999] No. 178);

(8) Circular of the State Administration of Taxation on the Issues Concerning the Exemption of Individual Income Taxes from Workers of State-owned Enterprises Obtaining One-Time Compensation Income for Dissolving Labor Contracts (Guo Shui Fa [2000] No. 77);

(9) Article 2 of the Circular of the State Administration of Taxation on Adjusting the Individual's Method of Calculating the Method of Collecting Individual Income Taxes for One-Year Annual Full-time Bonus (Guo Shui Fa [2005] No. 9);

(10) Notice of the State Administration of Taxation on the Issues Concerning the Exemption of Individual Income Taxes from Insurance Salesmen's Commission Income (Guo Shui Han [2006] No. 454);

(11) Articles 7 and 8 of the Supplementary Circular of the State Administration of Taxation on the Relevant Issues Concerning the Payment of Individual Income Tax on the Income of Individual Stock Options (Guo Shui Han [2006] No. 902);

(12) Article 1 of the Circular of the State Administration of Taxation on the Issues Concerning the Collection of Individual Income Tax on the Annual Performance Salary Deferred Cash Revenue and Term Reward of the Head of the Central Enterprise (Guo Shui Fa [2007] No. 118);

(13) Article 2 of the Announcement of the State Administration of Taxation on Individual Income Taxes on Individuals' Early Retirement to Obtain Subsidy Income (State Administration of Taxation Announcement No. 6 of 2011);

(14) Announcement of the State Administration of Taxation on the Issue of Individual Income Tax on the Collection of Commission Income of Securities Brokers (State Administration of Taxation Announcement No. 45 of 2012).

Attachment: Comprehensive income tax rate table after monthly conversion

Ministry of Finance and Taxation Administration

December 27, 2018

annex

Monthly income tax rate

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