State Administration of Taxation, Further Strengthening the Administration of Collection of Individual Income Tax from High-income Individuals Circular

Issued: June 1 2001

Main contents: The Circular calls for thorough and extensive investigation of individual incomes in high-paying sectors and professions, which include foreign investment enterprises, high-technology enterprises, top-ranking hotels, entertainment business, law firms and accounting firms. Special files shall be created on the basis of such investigation in order to closely monitor the economic activities and income of these sectors and professions and the high-income individuals engaged therein (Section Two). Further, the Circular requires the withholding agents in such sectors to keep detailed accounts of their payments to high-income individuals (Section Four). In addition, tax authorities shall take stronger measures to ensure that the withholding agents in such sectors and professions comply with regulations (Section Five). According to the Circular, one of the main tasks of the tax authorities for the current year and the next year is collection of individual income tax from sole proprietorships and partnerships (including law firms and accounting firms) (Section Six).
Related legislation: Special Inspection of Individual Income Tax Working Procedure (Trial Implementation); PRC, Administration of Tax Collection Law (Revised in April 2001), Apr 28 2001, CLP 2001 No.5 p12 & CLP 1995 No.3 p12; State Administration of Taxation, Establishing a System for Filing a Form Detailing the Payment of Individual Income by Individual Income Tax Withholding Agents Circular, 1995; State Administration of Taxation, Further Improving Administration of Collection of Individual Income Tax Circular, Apr 17 1997; PRC, Company Law (Amended), Oct 27 2005, CLP 2005 No.10 p21; PRC, Private Enterprise Tentative Regulations, Jul 1 1988 and State Administration of Taxation, Further Clarification of the Legal Liability of Individual Income Tax Withholding Agents Circular, Jun 26 1998, CLP 1998 No.2 p9