To further support employment and reduce the tax burden on withholding and prepayment of individual income tax, the State Taxation Administration promulgated the Announcement of the State Taxation Administration on improving and adjusting the methods of withholding and prepayment of individual income tax for certain taxpayers.
The main content is as follows:
For a resident individual who receives wage income for the first time in a tax year, the withholding and prepayment of individual income tax can be computed allowing a cumulative deduction for expenses based on RMB 5,000 per month.
Where a student who is receiving full-time academic education obtains income from remuneration for his/her internship, the withholding agent may compute and withhold tax using the cumulative withholding method stipulated in the Announcement.
Resident individuals who obtain income from wages and salaries for the first time refers to resident individuals who have not obtained wage and salary income or have not withheld or prepaid individual income tax on remuneration for provision of labour services pursuant to the cumulative withholding method during the period from the first month of a tax year to the first month of employment.
The announcement took effect from 1 July 2020.
Rebecca Chen
rebecca.chen@bdo.com.cn