A draft law (seventh draft amendments to the PRC individual income tax (IIT) law) containing broad changes to the IIT system was submitted to the Standing Committee of the National People's Congress for deliberation on June 19, 2018 and released to the public for consultation on June 29, 2018. This marks a significant milestone to the IIT reform.
What is changing?
The seventh draft amendments aim to promote social fairness and justice by introducing a fundamental change to the definition of resident, the consolidation of various categories of income, the introduction of more itemized deductions, anti-avoidance rules and new rules for tax compliance, collection and filing obligations.
What is the impact?
Compared with the existing IIT rule, the proposed new tax rule and the consolidated new tax reporting approach will enhance both the employer's and employee's tax reporting systems and bring the filing and collection to a different level.
To respond to the proposed changes, enterprises need to review their current supports on tax filings, mobility program for international employees and measures for managing the compliance risk.
The draft would also introduce anti-avoidance rules which allow the Chinese tax authorities to initiate tax adjustments where the arrangement/transaction lacks a reasonable commercial justification.
If legislative authorities pass the draft, the new rules become effective January 1, 2019. Are you ready for these changes?
First 15-20 minutes is for networking
Sandwiches and beverages included
Hosted by the Taxation Committee