Tax Changes Taking Place (17/04/2007)
1. How do the changes affect Individual Income Tax (IIT) Reporting Obligations?
Starting from January 1, 2006, employers, which served as the IIT withholding agency, are required to report and withhold for all types of incomes paid out to all relevant individuals; irrespective how much the payment amount is and whether the individuals are employees or not. Along with the income filing, personal data of the individual income earners are also requested. In particular, where the individuals are non-Chinese nationals (including people from Hong Kong, Macau and Taiwan), more detailed information shall be provided.
Starting from 2006, in addition to the IIT reporting from withholding agent, the following types of taxpayers are also obliged to furnish tax authorities with details of their income by the end of March of the following year:
· Chinese nationals having income derived from more than one source;
· Chinese nationals having income derived from overseas source; and
· Chinese nationals having income derived in China without any
· Taxpayers (including both Chinese nationals and foreign expatriates)
derived income more than RMB120, 000 per annum
2. How do the changes affect Higher Vehicle and Vessel Tax?
The regulation applies to both natives and foreigners. According to the regulation, within the territory of the People's Republic of China, the owners or managers of vehicles, shops and boats shall be the taxpayers of vehicle and vessel tax. The upper limit for vehicle tax is doubled, bringing the annual tax on passenger-carrying vehicles to between 60 and 660 yuan, and freight vehicles to between 16 and 120 yuan per ton.
3. How do the changes affect Urban Land Use Tax?
A new section is added to the regulation, "The units as stated in the aforementioned section shall include state-owned enterprises, collective enterprises, private enterprises, joint-stock enterprises, foreign-invested enterprises, foreign enterprises and the other enterprises-" This section includes foreign individuals and enterprises, which were only subject to low Site Use Fees and Land Transfer Fees, into levy target.
The amounts of land use tax per square meter have been raised to the
· RMB1.5 to RMB 30 in large cities;
· RMB 1.2 to RMB 24 for medium sized cities;
· RMB 0.9 to RMB 18 for small cities;
· RMB 0.6 to RMB 12 for cities under the county level, towns, and industrial and mining zones. "