China IIT Law Reform Q&A

The rapid economic development in China is a major factor to this round of fundamental reform of IIT Law, enabling the country to keep abreast with these developments. This tax reform is also believed to be a policy to stimulate consumer spending.

It has been seven years since China implemented the last Individual Income Tax (IIT) Law amendment in 2011. Below are what companies and multinational corporations in China should know about the proposed changes to the income tax law.

Q1. What are the objectives of the reform of "IIT Law of the People's Republic of China" (the "IIT Law")?

1. The amendment is aimed at creating fairness by introducing variable tax rates implemented across different income bands, increasing the standard basic deduction and adding specific deduction items.