China: Extended period for some IIT preferential policies
China Tax Alert
On December 29, 2021, the executive meeting of the State Council has decided to continue the implementation of some IIT preferential policies as follows:
One-off annual bonus for individual tax residents will not be consolidated into the comprehensive income and can be calculated by dividing the one-off annual bonus into 12 months to apply the corresponding monthly IIT rate and quick deduction. This means that the currently existing preferential policy on such bonuses is extended to the end of 2023.
Individual tax residents, whose (a) annual income does not exceed CNY 120,000 but requires tax settlement of underpaid IIT; or (b) underpaid IIT for annual IIT reconciliation that does not exceed CNY 400, are not required to settle the underpaid IIT. The preferential policy is extended to the end of 2023.
The share incentives (including stock options, stock appreciation rights, restricted stocks and equity awards etc.) obtained from listed companies by individual tax residents will not be consolidated into the comprehensive income and can be calculated independently by applying the corresponding comprehensive IIT rate and quick deduction. The preferential policy is extended to the end of 2022.