Individual Income Tax Deduction Plan Seeking for the Public Opinion

Monday, 22 October 2018 15:54

On October 20th 2018, the China Ministry of Finance and the State Administration of Taxation published “The Drafted Individual Income Tax Deduction Plan” for the seeking the public opinion (the “Drafted Plan”) till November 4th 2018. The final Plan is to be released and to take effect since January 1st 2019. Shanghai Dongjin finds the below points of the Drafted Plan.


It was the first time that the list of "specific additional deductions" was introduced into the individual income tax system and can be pre-deducted. The “specific additional deductions” cover the following six aspects.


  • Children’s education

According to the draft plan, expenditures on children's education could be deducted at a fixed standard of 12,000 yuan a year, or 1,000 yuan per month. The allowed period for Children’s education starts from 3 years old (pre-school education) to the Doctor Degree. The deduction can be made on single parent or both parents. If the family has two children, it is allowed to double the deduction range.


  • Adult education

The taxpayer him/herself can deduct the expenses on reeducation at 3,600 yuan (for reeducation as the professional person or technician) or at 4,800 yuan (for formal reeducation with formal diploma) a year.


  • Treatment of serious diseases

On medical costs of serious illness, the yearly expenditure spent by the patient (as the taxpayer him/herself) above 15,000 yuan (according to his/her record in the social insurance system) could be deducted, with an annual cap of 60,000 yuan.


  • Housing loan interest

On interest for loan for first house by the taxpayer or his/her spouse, a monthly deduction of 1,000 yuan will be allowed.


  • Apartment rents

If the taxpayer and his/her spouse has no own house and cannot enjoy the above deduction for housing loan interest, and if he/she rent a house, he/she can enjoy the deduction for apartment rents. The deduction will vary from cities, ranging from 800 yuan to 1,200 yuan a month. If the couple lives in the different cities, the double deduction can be applied.


  • Livelihood of seniors

If taxpayers are supporting parents aged 60 or above, they could get a monthly deduction of 2,000 yuan. Only children could enjoy the whole sum of 2,000 yuan in deduction, while the sum will be divided among siblings if there is more than one child.


According to Article 28 of the Drafted Plan, the foreign employee can decide whether to join in this Plan or still stick to the current policy.


We will keep a close eye on the final version and keep you noted.


If you have any question, please contact me.

Mr. Mike Chang

TEL: 0086-21-68868321 / FAX: 0086-21-68868021

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Mr. Mike Chang



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