With the continuous improvement in China's Individual Income Tax Law, foreigners can enjoy the same tax reduction policies as their Chinese counterparts.
On September 1, 2018, the Regulations for the Individual Income Tax Law of the People's Republic of China was officially implemented, and the Implementation of the Individual Income Tax Law of the People's Republic of China was officially effective on January 1, 2019.
Foreigners who meet the conditions as Chinese residents can choose to enjoy special additional deductions.
Annual individual income tax settlement of 2022 will be processed from March 1 to June 30, 2023. This year, the tax department has launched appointment service.
Taxpayers who need to apply for the initial period (March 1-20) to do the settlement can make appointments for any of the above days through the Individual Income Tax app or the website of the Natural Person E-Tax Services (自然人电子税务局 www.etax.chinatax.gov.cn) after February 16. From March 21 to June 30, taxpayers can do the settlement at any time without making an appointment.
1. What items are included in the special additional deductions?
The special additional deductions cover educational costs for children, continuing education expenses, health-care costs for major diseases, housing loan interest, rent, elderly support and care expenses for children under the age of 3.
2. Who can enjoy the deduction of educational costs for children? What and how much are the deductible costs?
Taxpayers who can enjoy the special additional deduction for educational costs for children are the children's legal guardians, including biological parents, stepparents, adoptive parents and other legal guardians of the children. Here children mean legitimate children, illegitimate children, adopted children, stepchildren, as well as minors who are not their own children but are under their guardianship. Educational costs for children can be deducted at the standard quota of 24,000 yuan per child per year (2,000 yuan per child per month).
3. Can parents with more than one child choose different deduction policies for different children?
Yes. For example, for child A, one parent can choose to deduct at the rate of 2,000 yuan per month and for child B, both parents can choose to deduct at the rate of 1,000 yuan per month.
4. Who can enjoy continuing education expenses deduction? What and how much are the deductible self-education expenses?
For taxpayers, the expenses of continuing education (academic qualification/degree) in China are deductible at the standard quota of 400 yuan per month during the continuing education (academic qualification/degree) period.
The deduction period for continuing education for the same academic qualification or degree shall not exceed 48 months. Continuing education expenses of professional qualifications of skilled personnel or professional qualifications of specialized technicians incurred by taxpayers are deductible at the fixed rate of 3,600 yuan in the year when the relevant qualifications are received.
5. When a taxpayer is entitled to deduction for continuing education expenses, are the periods of suspension of schooling without losing one's status as a student due to illness or other reasons and summer and winter vacations organized by the educational institution in accordance with regulations counted as the deduction period consecutively?
The deduction period of continuing education expenses shall not exceed 48 months, which should be calculated consecutively, including the suspension of schooling without losing one's status as a student due to illness or other reasons, as well as the summer and winter vacations.
6. Can I enjoy deduction for continuing education expenses if I have undertaken continuing education (degree) abroad, or if I have obtained a skills certificate issued abroad?
No. Taxpayers can enjoy continuing education expenses for academic qualifications or degrees received only within China, as well as continuing education expenses of professional qualifications of skilled personnel or professional qualifications of specialized technicians in accordance with the provisions.
7. Who can enjoy health-care costs for major diseases? What and how much are the deductible health-care costs for major diseases?
Within a tax year, for medical expenses incurred by a taxpayer that are relevant to the basic medical insurance, the part of such expenses that are individually borne and paid by the taxpayer after medical insurance reimbursement (those are to be individually borne under the medical insurance catalogue) cumulatively in excess of 15,000 yuan is deductible as they are actually incurred up to the standard limit of 80,000 yuan per year at the time of individual income tax settlement.
Medical expenses incurred by a taxpayer are deductible from the taxable income of either the taxpayer or his/her spouse; medical expenses incurred by a minor may be deducted from the taxable income of either parent of the minor. The deduction amounts for the medical expenses incurred by a taxpayer and the spouse or any minor child of the taxpayer shall be calculated separately.
8. Are the health-care costs in private hospitals deductible?
For private hospitals included in the medicare billing system, taxpayers can enjoy a deduction for health-care costs for major diseases incurred in relation to basic medical insurance in accordance with the regulations, as long as the expenses incurred by taxpayers for medical treatment can be reflected and aggregated in the medicare system.
9. Who can enjoy the deduction for housing loan interest? What and how much is the deductible housing loan interest cost?
A taxpayer or his/her spouse or both who have purchased a house within China for the taxpayer or his/her spouse with an individual housing loan taken alone or jointly by the taxpayer or his/her spouse from a commercial bank or from the Housing Provident Fund, the costs incurred from the payment of mortgage interest on any housing loan for first-time home buyers are deductible at the standard rate of 1,000 yuan per month in years when such mortgage interest is actually incurred, provided that the deduction period does not exceed the maximum of 240 months.
A taxpayer can only enjoy the deduction for housing loan interest on a housing loan for first-home buyers once. The costs of housing loan interest may be deducted from the taxable income of either of the spouses upon mutual agreement between them, and the specific deduction method cannot be changed within one tax year.
10. Who can enjoy rent deduction? What and how much is the deductible rent expense?
Rent expenses incurred by taxpayers and their spouses who do not own a house in their main working city are deductible in accordance with the provisions of the special additional deduction for rent. The person who has entered into a rental housing contract can enjoy the rent deduction. If the couple's main working city is the same, only one of them can deduct the expenses. Taxpayers are not allowed to enjoy the deduction for housing loan interest and rent separately at the same time.
The specific deduction criteria are:
(1) For municipalities managed directly by the central government, provincial capitals (capital cities), cities separately listed in the plan and other cities determined by the State Council, the deduction criteria is 1,500 yuan per month;
(2) For cities other than those listed above, the deduction criteria is 1,100 yuan per month for cities with a registered population of more than 1 million in the municipal area; for cities with a registered population of less than 1 million in the municipal area, the deduction criteria is 800 yuan per month.
11. Can I take deductions for shared accommodation?
Rent is deductible by the tenant who signs the rental contract. Therefore, individuals (non-conjugal relationship) who share a rental property and have both signed a regulated rental contract with the lessor can each deduct the amount according to the regulations.
12. Who can enjoy deductions for elderly support? What and how much is the deductible elderly support cost?
Persons who can enjoy deductions for elderly support include:
- All children who have the obligation to support their parents. The Marriage Law stipulates that legitimate children, children born out of wedlock, adopted children and stepchildren have the obligation to support their parents.
- The grandchildren who have the obligation to support their grandparents whose children are all deceased. Taxpayers who support their parents aged 60 or above and grandparents aged 60 or above whose children are all deceased are eligible for the deduction.
The specific deduction criteria are:
- For an only child, the deduction is fixed at 3,000 yuan per month.
- For a child with siblings, the deduction of 3,000 yuan per month should be shared with his/her siblings, with the maximum shared deduction not exceeding 1,500 yuan per month.
13. If a non-resident individual qualifies to become a resident individual, can he/she deduct the costs of elderly support in calculating individual income tax?
If a non-resident individual qualifies to become a resident individual, he/she can enjoy the special additional deduction for elderly support when settling their annual individual income tax.
14. Who can enjoy deduction for care expenses for children under the age of 3? What and how much is the deductible cost?
Costs related to care expenses for children under the age of 3 are deductible at a rate of 2,000 yuan per month per infant. Taxpayers can choose to have one parent deduct 100 percent of the deduction or both parents deduct 50 percent of the deduction, and the specific deduction method cannot be changed within a tax year.
15. When can eligible taxpayers apply for the special additional deduction?
With the exception of health-care costs for major diseases, the other special additional deductions are available to taxpayers, who meet the conditions for one or more of these deductions during the tax year by filling in the relevant information with the withholding agent of their salaries and wages.
Taxpayers applying for health-care costs for major diseases, and those who have not enjoyed the deduction or not fully deducted them during the year can fill in the relevant special additional deduction information to tax authorities and enjoy the deduction when they make the settlement for individual income tax from March 1 to June 30 of the following year.
16. How to submit information for the special additional deduction?
Taxpayers can report their special additional deduction information to the withholding agent or the competent tax authority through the remote tax terminal, electronic or paper returns, etc.
17. How should I claim the special additional deduction if I have two employers?
If a taxpayer has more than one employer at the same time, only one of them can be selected for deduction in a tax year for the same special additional deduction item.
18. For taxpayers who choose to have their special deduction claimed by the withholding agent, what should be done through Individual Income Tax app or the website of the Natural Person E-Tax Services if there is a change in the special deduction information?
Taxpayers can update it by themselves through the Individual Income Tax app or the website of the Natural Person E-Tax Services (自然人电子税务局), and then notify the withholding agent to download the latest special additional deduction information by clicking "download and update" in the withholding system.