By Tanny Chow, Stone Compass Associates

15 Jaunary 2019

With the introduction of new special itemized deductions on 1 January 2019, taxpayers are required to provide their personal data in order to claim the allowable deductions. Below are the four methods of submitting personal data.

1. Mobile App registration and submission

Scan the QR code to install the App on the mobile device. To create an account, taxpayer is required to either (1) visit the tax bureau to obtain an account registration code which is valid for 7 days, or (2) authenticate on the mobile device via face recognition. This App method is only suitable for China identity card holders

2. Online registration and submission

To create an online account, taxpayer is required to firstly visit the tax bureau to obtain an account registration code. With the code, visit the website https://its.tax.sh.gov.cn/ and register a new account. Select the special itemized deductions Form and fill out the necessary details. Send the completed form online to the IIT withholding agent (employer or other appointed service provider).

3. Online electronic Form completion and submission

Complete an Excel file by referring to the instructions provided within the file and send the electronic copy to the IIT withholding agent (employer or other appointed service provider).

4. Paper Form completion and submission

The IIT withholding agent can print out the Excel form, complete and send it to the tax authority on behalf of the taxpayer.

APPLYING DEDUCTIONS

Taxpayer can choose to submit personal data relating to allowable deductions directly to his / her employer for monthly deductions using any of the aforementioned method. Alternatively, taxpayer can submit such data directly to the tax authority without going through the employer. This way, taxpayer can apply for a tax refund when doing the annual IIT declaration in the year that follows.

ANNUAL IIT DECLARATON

In general, annual IIT declaration is required under the following circumstances:

  1. Taxpayer earns comprehensive income from more than one employer, and the aggregated comprehensive income net of all allowable deductions (such as social insurance contributions, housing fund, etc) exceeds RMB 60,000 in a year.
  2. Taxpayer earns income for personal services, remuneration for author, or royalties, and the aggregated comprehensive income net of all allowable deductions (such as social insurance contributions, housing fund, etc) exceeds RMB 60,000 in a year.
  3. The actual tax liability exceeds the sum of tax prepayment made for a tax year.
  4. The actual tax liability is less than the total of tax prepaid for a tax year in which case the taxpayer is entitled to a tax refund which is to be claimed through the annual declaration process.
  5. The IIT withholding agent of the taxpayer does not apply the special itemized deductions monthly. The taxpayer then claims those deductions and a tax refund through the annual declaration process.

TAX ID NUMBER

In accordance with Announcement 59 published in December 2018 by the State Administration of Taxation in China, taxpaying individuals must present their unique tax ID number when handling tax matters in the following areas:

  1. Making tax enquiries
  2. Applying for tax refund
  3. Making tax payment
  4. Requesting for proof of tax payment made
  5. Completing annual tax declaration

For China Identity Card holders, the tax ID number is identical to their Identity Card number. For non-China Identity Card holders, a randomly generated number will be assigned to the taxpayers upon their first-time handling of tax affairs.

Have a question? Get in touch with Stone Compass Associates for a consultation at info@stone-compass.com.