CHINA is planning to raise the individual income tax threshold from 3,500 yuan (US$555) per month to 5,000 yuan, as well as carry out taxation deductions and other tax reforms in a bid to relieve personal tax burdens.

Described as “an unprecedented tax reform,” an amendment draft for the Individual Income Tax Law was submitted to the country’s top legislative body for review yesterday, which proposes to raise the tax exemption amount from 3,500 yuan to 5,000 yuan each month.

The draft also for the first time allows personal tax deductions for spending on children’s education, continuing education, medical fees for critical illness, interest for housing loans as well as housing rent.

A comprehensive calculation method of net taxable income combining salary incomes, labor incomes, remuneration as well as royalties will also been introduced for the first time if the draft is passed. Other notable possible changes include improving the tax rate structure and introducing an anti-avoidance clause.

The draft is China’s seventh amendment to the personal income tax law since its introduction in 1980.  (SD-Agencies)