Amendment to the PRC Individual Income Tax Law in 2011

Thursday, 26 July 2012 11:56


The twenty-first meeting of the Standing Committee of the 11th National People’s Congress (NPC) has passed the latest version of the “Amendment to the Law of the People’s Republic of China on Individual Income Tax” on 30 June 2011. The Revised IIT Law will become effective from 1 September 2011.

Key changes

  •   The monthly standard deduction (MSD) for Chinese individuals’ income from salaries and wages will increase from RMB2,000 to RMB3,500.
  •   The income tax rates applicable to income of salaries and wages will change from the current nine-bracket progressive rates to seven-bracket progressive rates, reducing the lowest rate from 5% to 3%, eliminating income tax rates of 15% and 40% and adjusting the income level applicable to each tax rate.
  •   The monthly standard deduction (MSD) in the amount of RMB4,800 for foreign employees remains unchanged.

Impacts on both local and expatriate employees under the Revised IIT Law will be as follows:

Local employees

Expatriate employees

Monthly salaries and wages (before deducting MSD)

Tax burden

Monthly salaries and wages (before deducting MSD)

Tax burden

Less than RMB 38,600

Reduction of IIT from RMB 480 or less per month

Less than RMB 17,400

Reduction of IIT from RMB 205 or less per month

 RMB 38,600

Remain unchanged

 RMB 17,400

Remain unchanged

 In excess of RMB 38,600

Increase in IIT up to RMB 1,195 per month

 In excess of RMB 17,400

Increase in IIT up to RMB 1,870 per month


Although the Revised IIT Law has met the goals of further reducing the tax burden for people with middle or low income and adjusting the same on high income individualsHopefully more additional amendments could be brought from IIT reform and we will keep you informed of the latest development.

If your Company and you requires any support or assistance, please contact our professional team.

Also welcome to contact us about latest regulation of individual income tax or social insurance.

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