Ministry of Finance and State Administration of Taxation, Circular on Revising the Policy on Pre-tax Deductions of Wage Expenses from Enterprise Income Tax

Issued: September 1 2006
Effective: July 1 2006

Main contents: As of July 1 2006, the limit on pre-tax deduction of enterprise wage expenses shall be adjusted to a monthly average of Rmb1600 per person (Article 1). The provision regarding upward adjustment of the deduction limit on taxable wages by people's governments of all provinces, autonomous regions and municipalities directly under the central government within the range of 20% shall no longer apply (Article 2). Various forms of employees' remuneration and other related expenses, including bonuses, allowances, subsidies and other wage-type expenses, paid by an enterprise to its staff and workers shall be included as the total wage of the enterprise (Article 5).
Repealed legislation: Circular on Revising the Deduction Limit on Taxable Wages, 1996 and Article One of the Circular on Certain Issues Concerning the Revision of the Deduction Limit on Taxable Wages and Other Issues, 1999