Faculty Author Type

Current Faculty [Wei Cui]

Published In

Tax Notes International

Document Type


Publication Date



China, Personal Income Tax Return


In December 2005, as newly authorized under the amended Personal Income Tax Law (PITL), China’s State Council announced that taxpayers with annual income in excess of RMB 120,000 (US$15,000) would be required to file annual tax re-turns.The task of designing the procedures for the new return filing requirement was delegated to the State Administration of Taxation (SAT). On November 6, 2006, 11 months after the new return filing requirement was announced, and less than two months before the first filing season was to begin,the SAT finally issued a set of rules on filing procedures, including a new sample annual tax return. That means that local tax bureaus, which are responsible for administering the personal in-come tax (PIT), and Chinese taxpayers have had less than two months to learn about and prepare for what is potentially a historic change in China’s PIT administrative and compliance regime. The disproportion between the tasks faced by tax agencies and taxpayers on the one hand, and the minimal time and published guidance provided on the other,makes the likely impact of the new procedures difficult to assess.Nonetheless, this article will attempt to assess the new return filing regime from three different perspectives. First, it reviews the main changes inapplicable law brought by the new return filing procedures. Second, it ventures some predictions regarding the impact that the new compliance regime, along with other recent and imminent changes in Chinese tax law, could have on the incidence of the PIT. Third, it discusses what the new return filing requirement implies for the overall PIT compliance and the administrative structure for the PIT.

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