State Administration of Taxation, Circular on Clarifying Issues Concerning the Implementation of Several Individual Income Tax Policies

Issued: August 17 2009

Main contents: Article 1 on the tax assessment method for year-end bonus specified in the State Administration of Taxation, Official Reply on Several Policy Issues Concerning Individual Income Tax (Guo Shui Han [2002] No.629) shall cease to be implemented (Article 1). Where an individual serves with, or is employed by, a company (including affiliates) and is concurrently a director or supervisor, he/she shall consolidate the director or supervisor's fees with his wage income, and pay individual income tax on such fees as wages and salaries. Article 1 of the State Administration of Taxation, Circular on Issues Concerning the Levy of Individual Income Tax on Directors of Foreign-invested Enterprises Who Take up Direct Management Responsibilities (Guo Shui Fa [1996] No.214) shall cease to be implemented (Article 2). Severance of premises ownership by way of property division upon divorce refers to the disposal of joint tenancy of the married couple. Individual income tax shall not be levied on the transfer of premises ownership as a result of divorce (Article 4).

Related legislation: PRC Individual Income Tax Law (5th Revision), Dec 29 2007, CLP online; and Implementing Regulations for the PRC Individual Income Tax Law (2nd Revision)