China Looks At Tax Changes for Individuals
March 7, 2014 Taxation in China
BEIJING – Low income earners in China may soon feel some financial reprieve, as the government mulls raising the tax free threshold and giving some concessions for unavoidable personal expenses.
In a press conference held during the annual National People’s Congress on March 6th, the Finance Minister of China Lou Jiwei revealed that the government is currently looking at the possibility of changing the current regulations of personal income taxes, to fairly reduce income inequality in China.
Lou Jiwei indicated that one of the key changes under consideration at the moment by the government of China is raising the tax-free threshold on personal incomes from RMB 3 500 per month to as much as RMB 5 000 per month.
However, the Finance Minister specifically noted that an increase of the thresholds is not sole option, and some additional allowances, concession and benefits shall also be provided to people in need, as “…an individual can live fairly comfortably with a monthly salary of 5,000 yuan, but will have a hard life if they have a child to support.”
Despite the overall positive remarks of international tax experts, some have of them have already said that the planned increase of the threshold is not enough, and to accommodate the growing cost of living and the economic and financial realities of modern China, the minim threshold should be as high as RMB 30 000.
Photo by: Dainis Matisons