18 Jan 2019
Individual Income Tax Law amendment on Sept 1, 2018 and effective on 1st January 2019
The 2018 amendment of the PRC IIT law has impact on the following areas:
A. Impact on disposable income (after-tax income)
The taxpayer has more after-tax income than previously (before taking into consideration of social security contribution). Note that the after-tax income is calculated assuming that the same level of social security contribution as previously.
On the one hand, the PRC IIT law is amended. On the other hand, the PRC government has strengthened the collection of the social security contribution, by changing the collecting agent from social security authority to the tax authority that uses a higher base for collecting social security contribution. If the change in social security contribution is taken into account, the taxpayer is worse off than before.
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