Reminder for the 2023 Annual IIT Reconciliation

In China, the months from March to June are busy for the annual reconciliation of individual income tax (IIT). You will find key information for your reference in this article.

by | May 12, 2024 | Accounting & Tax

The annual individual income tax (IIT) reconciliation is currently underway. According to the IIT Law and its implementation regulations, the State Taxation Administration has issued the ” Announcement on relevant matters regarding the 2023 annual individual comprehensive income tax reconciliation filing”. Below, you will find key information for your reference:

Situations Where Annual Reconciliation is Not Required:

  • Taxpayers’ annual comprehensive income does not exceed RMB 120,000
  • Taxpayers’ tax payable after the Annual Reconciliation is no more than RMB 400
  • Taxpayer’s prepaid tax amount matches the annual tax payable amount
  • Taxpayers are due for a tax refund after the Annual Reconciliation and agree to forfeit their right to the refund claim

 

Situations Requiring Annual Reconciliation:

 

  • Taxpayers who have prepaid more than the tax due and wish to apply for a refund
  • Taxpayers’ comprehensive income exceeds RMB 120,000, and the additional tax due is more than RMB 400

Reconciliation Period:

March 1, 2024, to June 30, 2024

Documentation Required:

 

Typically, only the Personal Income Tax Annual Self-Assessment Tax Return needs to be filed.

If there are changes to personal information, new deductions, or tax incentives to be claimed, relevant supporting documents should also be submitted according to regulations.

 

Tax Incentives for Foreign Nationals:

 

Under China’s tax laws and regulations, individuals who reside in China for 183 days or more in a calendar year are considered resident taxpayers. Both Chinese citizens and foreigners must complete the annual IIT reconciliation process between March 1 and June 30.

 

As part of China’s tax policy, foreign nationals working in China may be eligible for various tax incentives. These can include allowances for housing, language training expenses, and children’s education. It is essential for foreign nationals to consult with a tax professional to understand the specific benefits available under the latest tax policies and how they might apply to their circumstances.

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