China Extends Several Preferential Tax Treatments

China has extended preferential tax treatment for the annual one-time bonus to the end of 2023.

On 29 December 2021, Premier Li Keqiang chaired the executive meeting of the State Council, in which measures to continuously reduce the burden of Individual Income Tax ("IIT") taxpayers and relieve the pressure on middle and lower-income groups were extended beyond their previous expiration date.  

The meeting, in fact, decided to continue the implementation of some preferential policies for IIT: 

1. Annual one-time bonuses can be considered aside the salary income of the month in which they are paid and do not influence the cumulative income of the recipients. The policy offering the choice to separate the tax calculation according to the monthly conversion tax rate for the bonus amount will be extended until the end of 2023.