2023 New Changes in Individual Income Tax

One of the sources of fiscal revenue is tax, in order to ensure stable fiscal revenue, the state will be based on economic development to develop the year's tax enactment and tax rates, personal income tax is one of the most widely levied taxes. First, 2022 new personal income tax adjustments have what 1, the new policy of personal taxation government work report in the recommendations on the work of the government mentioned, raise the starting point of personal income tax. Vice Minister of Finance Shi * Bin said at the two sessions of the press conference, the starting point increased to what extent, will be based on the changes in the basic level of consumption of life of the residents to make policy recommendations. The individual tax reform highlights the new connotation of special deduction, the preferred focus is on children's education, medical treatment for major illnesses and other aspects of the people's most urgent needs and concerns. The reform will transform the categorized tax system into a comprehensive and categorized individual income tax system, and the next step will be to accelerate the launch of the tax reform program, as well as to start the revision of the law on individual income tax. CPPCC National Committee members, the Chinese Academy of Fiscal Sciences President Liu*Xi that the tax reform must be a comprehensive balance of the country's "pocketbook" and personal "pocketbook", special deductions, tax rates, tax model adjustment is subject to a variety of factors, such as the need to attract The adjustment of special deduction, tax rate level and tax collection mode is subject to various factors, such as the need to attract talents, the need to simplify the tax system and the expectation of the society for fair adjustment. The starting point of personal income tax is a common and easy-to-understand term, which is more accurately expressed as the standard or exemption amount of personal income tax deduction for salaried income. For the majority of the working class, it is the most direct and intuitive relationship with the level of personal tax burden, and therefore has become the focus of attention of all sectors of society. Raising the personal income tax exemption amount is a response to the public's call for lowering the personal tax burden, which is conducive to steadily raising the income level of the residents and enhancing the people's sense of well-being and acquisition. The main consideration for setting the exemption amount is the cost and basic livelihood expenses of taxpayers. The current personal income tax exemption amount was adjusted in 2011. In recent years, with the economic development, price rise and income growth, the basic living needs and expenses of the people are also increasing year by year, and the current exemption amount standard already appears to be too low. In order to ensure that people's basic living standard is not affected, raising the personal income tax exemption amount is the right thing to do. However, the exemption amount is only one of the elements of the personal income tax system, and it is not in the main position in the setting of the personal income tax system. Simply raising the exemption amount, though simple and beneficial to the public, is not conducive to the improvement of the tax system, nor is it conducive to the redistributive function of personal income tax. Compared with the previous personal income tax reforms, which only focused on the adjustment of the exemption amount, this government work report further proposes to increase the deduction of special expenses for children's education and medical treatment for serious illnesses, which is conducive to further improving the fairness of personal income tax and means that the personal income tax reform has finally made substantial progress. The significance of increasing special expense deductions is to enhance tax fairness among families with different burdens. For different individuals, even if their incomes are the same, they may face different family burdens such as children's education, medical care, housing, etc., and their taxpaying abilities are not the same. Including the expenses on children's education and medical treatment for serious illnesses, which are most deeply felt by the general public, in the scope of pre-tax deduction for individual income tax and setting reasonable deduction standards are conducive to balancing the tax burdens of families with different burdens and enhancing the fairness of the individual income tax system. Raising the exemption amount and increasing the deduction for special expenses are the improvement of the pre-tax deduction items of personal income tax, which is only one of the links of the personal income tax reform, not the whole of the personal income tax reform. Individual income tax is still facing the need to deepen the reform in a comprehensive manner. Individual income tax is an important tax for raising fiscal revenue and one of the most favorable tools for the government to regulate income distribution, and the two are complementary and indispensable. Today, when the construction of socialism with Chinese characteristics enters a new era, it is of great significance to accelerate the reform of personal income tax. It is an important hand in resolving the major social contradictions of the new era, narrowing the income gap, and realizing balanced and full development; it is also a fundamental system of the modern national governance system, which is conducive to enhancing the people's sense of participation in the governance of the country, and promoting the realization of the goal of good governance, such as social fairness and justice.2. Individual tax and income tax reform measures include the first one, merging and simplifying part of the tax items. Appropriate consolidation of income classification can reflect the real taxpayers' ability to pay taxes, possibly by first dividing the current 11 income subcategories into several major categories, for example, by dividing personal income of a labor nature into one category, which includes income from wages and salaries, income from remuneration for labor, and income from manuscripts. Income of a property nature will be divided into one category, including income from production and operation of individual industrial and commercial households, income from contracting and leasing of enterprises and institutions, income from royalties, interest, dividends and bonuses, income from leasing of property, and income from transfer of property. Occasional income and other income are categorized. Second, improve the pre-tax deduction system of "basic deduction + special deduction". Currently, pre-tax deductions for personal tax already include basic pension, medical care, unemployment insurance premiums, housing provident fund, and within a certain limit, occupational pension, enterprise annuity, commercial health insurance, etc. Commercial pension insurance will also be included in the future. The major progress of this reform is to increase the special deduction, including the expenditure on supporting the elderly, medical expenditure on major diseases and children's education expenses, to reduce the burden of "two-child" families. There are also calls for the inclusion of special deductions for housing mortgage interest expenses, personal career development and re-education expenses. At present, there are many proposals to set up a standard indexing adjustment mechanism for the starting point, combined with the price level and the degree of inflation to make dynamic and flexible adjustments to mitigate the impact of economic fluctuations on the standard of living of the residents, and there are also proposals to implement the regional differentiation of the starting point, whether these proposals can be implemented still needs to be observed. Third, optimize the tax rate structure. Based on the tax rate structure stipulated in the current Individual Income Tax Law, the marginal tax rates should be adjusted appropriately, the progressive brackets should be simplified, and the applicable tax rates for major categories of income should be determined reasonably. Fourth, explore the introduction of a family expenditure declaration system. Due to the changes in China's family structure and the complexity of the family economic structure, it is difficult to fully implement comprehensive family declaration in the short term, and on the basis of maintaining the individual as the tax unit, couples will be gradually allowed to jointly declare their family expenditures on supporting the elderly, children's education, and interest on housing mortgages, etc., and to share the deductions between the couples or have one of them deducted, with the couple paying taxes separately. Fifth, improve tax-related information systems and collection and management mechanisms. First of all, to promote the industrial and commercial, public security, justice, customs, social security, banking, housing, securities and other sectors of tax-related information **** to enjoy, to realize cross-sectoral and cross-regional networking of tax-related information, and to establish and improve the information system on the income and property of natural persons. The verification of the authenticity of pre-tax deduction information also puts higher demands on the tax authorities' data analysis, investigative capabilities, and collection and management capabilities. There is also a need for sound supporting policies such as popularization of individual tax numbers, binding of tax-related information, and integrity system constraints. Second, what are the contents of the taxation of individual income tax "Individual Income Tax Law" Article 2 of the following individual income, shall pay individual income tax: (a) wages, salary income; (b) remuneration for labor; (c) remuneration income; (d) royalties income; (e) operating income; (f) interest, dividends, bonus income; (g) income from the leasing of property; (h) income from the transfer of property; (ix) accidental income. (ix) incidental income. Resident individuals obtaining income from the first to the fourth items of the preceding paragraph (hereinafter referred to as comprehensive income) shall calculate individual income tax on a consolidated basis according to the taxable year; non-resident individuals obtaining income from the first to the fourth items of the preceding paragraph shall calculate individual income tax on a monthly basis or on a sub-item basis. If a taxpayer obtains the income from the fifth to the ninth items of the preceding paragraph, the individual income tax shall be calculated separately in accordance with the provisions of this Law.1. Salary and Wage IncomeSalary and wage income refers to the salary, wage, bonus, year-end salary increase, labor bonus, allowance, subsidy, and other incomes related to the position or employment obtained by an individual due to the position or employment. That is to say, the income obtained by an individual, as long as it is related to the post, employment, regardless of its unit of funds expenditure channels or in the form of cash, in-kind, securities and other forms of payment, are wages, salaries, the object of taxation. 2, the production and operation of the individual businessman's income from the individual businessman's production and operation of the individual businessman's income includes four aspects: (a) by the administration for industry and commerce approved the opening of the business and receive a business license for the urban and rural individual businessmen. (a) Individual industrial and commercial households in urban and rural areas approved by the administration for industry and commerce and receiving business licenses, engaged in industry, handicrafts, construction, transportation, commerce, catering, services, repair and other industries, production and business income. (ii) Income obtained by individuals who have been approved by the relevant government departments and have obtained business licenses to engage in schooling, medical care, consulting and other paid service activities. (iii) Income derived by other individuals from engaging in individual industrial and commercial production and operation, as well as income derived by individuals from engaging in production and operation activities on a temporary basis. (d) The above individual industrial and commercial households and individuals obtain all taxable income related to production and operation.3. Income from contracting and leasing to enterprises and institutionsIncome from contracting and leasing to enterprises and institutions refers to the income obtained by individuals from contracting and leasing as well as subcontracting and subletting, including income from salaries and wages obtained by individuals on a monthly basis or on a per-occasional basis.4. Income from remuneration for labor servicesIncome from remuneration for labor services refers to the income obtained by individuals from designing, manufacturing and operating activities and other remunerated service activities. Income from remuneration for labor services refers to the income derived from design, decoration, installation, drafting, laboratory, testing, medical, legal, accounting, consulting, lecturing, journalism, broadcasting, translation, reviewing, painting, calligraphy, sculpture, film, television, sound recording, video recording, performance, performance, advertisement, exhibition, technical service, referral service, economic service, agency service, and other labor services.5 Income from manuscripts refers to the income derived from the publication of a work in the form of books or newspapers. Income from remuneration for literary works refers to the income obtained by an individual from the publication of his/her works in the form of books or newspapers. The "works" mentioned here refer to the works that can be published in the form of books and newspapers, including Chinese and foreign words, pictures, music scores, etc.; "personal works" include one's own writings, translations, etc. The remuneration for posthumous works should be obtained by the individual. Individuals who receive remuneration for posthumous works shall be taxed according to the income from manuscripts.6. Royalty IncomeRoyalty income refers to the income derived from the provision of patent rights, copyrights, trademarks, non-patented technologies and other rights to use franchises. Income derived from the provision of the right to use copyrights does not include income from manuscripts. The income obtained from the public auction (bidding) of the original or copy of the manuscript of the author's own written work shall be taxed according to the item of royalty income.7. Interest, Dividend and Bonus IncomeInterest, dividend and bonus income refers to the interest, dividend and bonus income obtained from the ownership of debt and equity by an individual. Interest refers to an individual's interest on deposits (the state announced the abolition of interest tax starting the day after October 8, 2008), interest on goods and interest on the purchase of various bonds. Dividends, also known as stock dividends, are the investment benefits that stockholders receive from a joint stock company on a regular basis by virtue of their stock certificates in accordance with the articles of incorporation of the joint stock company. Dividends, also known as company (enterprise) dividends, is a joint-stock company or enterprise according to the profits to be distributed according to the shares of profits in excess of the dividend portion of the distribution. Joint-stock enterprises in the form of shares to individual shareholders to pay dividends, bonuses, that is, the distribution of bonus shares, should be distributed for the face value of the shares for the amount of income tax.8, property rental income property rental income, refers to individuals to rent out buildings, land use rights, machinery, equipment, vehicles and boats, as well as other property income. Property includes movable and immovable property.9. Income from property transfer Income from property transfer refers to the income derived from the transfer of securities, equity, buildings, land use rights, machinery and equipment, vehicles and boats, as well as other property to others or units, including the transfer of immovable and movable property and the income derived. There is no tax on the income derived from individual stock trading.10. Incidental IncomeIncidental income refers to the income derived by individuals on a non-recurring basis, which belongs to a variety of opportunistic income, including winning prizes, jackpots and lotteries, as well as other incidental income (including prizes, in-kind goods and marketable securities). Individuals purchasing social welfare prize fund-raising lottery tickets and China Sports Lottery tickets are exempted from individual income tax if the income from a single win does not exceed RMB 10,000, and if it exceeds RMB 10,000, it shall be taxed in full according to the incidental income items (the tax rate as of April 21, 2011 is 20%).11. Other IncomeIn addition to the above 10 taxable items, the State Council shall determine the tax to be levied on the other incomes. The finance department of the State Council shall determine the tax to be levied. The financial departments of the State Council refer to the Ministry of Finance and the State Administration of Taxation. The Ministry of Finance and the State Administration of Taxation to determine the taxation of other income items are: (a) individuals to obtain "Cai Guanshen Chinese Academy of Sciences Academician Honorary Foundation" issued by the Chinese Academy of Sciences Academician Honorary Bonus. (ii) Individuals who have obtained bonuses paid by the banking sector in excess of the national interest rate and value-added subsidy rate of the collection of deposits. (iii) Individuals who have obtained preferential income from non-reimbursable payments due to the payment of relevant insurance costs by the organization in which they work. (iv) Interest paid to insurance companies on the insured amount at the bank's savings deposit rate for the same period of time to life insurance households that are not insured during the policy period (or similar income paid in other names). (v) Rebate income or transaction fee rebate income obtained by individual stockholders from securities companies soliciting large stockholders to open accounts and trade with the Company, and paying a portion of the transaction fee obtained to large stockholders. (vi) Individuals obtaining cash, in-kind or marketable securities issued by some units and departments to relevant personnel of other units and departments in the course of year-end summaries, various celebrations, business transactions and other activities. (vii) Resignation risk money. (viii) Individuals receive remuneration for providing guarantees for units or others. Income obtained by an individual that is difficult to delimit which taxable income item it is, will be examined and determined by the competent tax authorities. There will also be exemptions for special sources of income.