China Raises IIT Special Additional Deduction Standards
On 31 August 2023, the State Council issued a «Notice on Increasing the Standard for Special Additional Deductions for Individual Income Taxes», raising the pre-tax deduction standards on certain expenses related to child care, education, and elderly support in China.
The notice clarifies that from 1 January 2023 onwards:
- The special additional deduction standard for nursing expenses for children under three years old will be raised from CNY 1,000 per child per month to CNY 2,000 per child per month.
- The special additional deduction standard for children’s education will be raised from CNY 1,000 per child per month to CNY 2,000 per child per month.
- The special additional deduction standard for supporting the elderly will be raised from CNY 2,000 to CNY 3,000 per month. Among them, if pertaining to an only child, the deduction is according to the standard quota of CNY 3,000 yuan per month. In case of more than one child, a monthly deduction amount with their siblings, and the amount shared by each person cannot exceed CNY 1,500 per month.
|400/month (< 48 months) or 3,600/year
|Big disease medical
|Actual amount below 80,000/year
Reference place: Shanghai
The new deduction standards have a retrospective effect from 1 January 2023, meaning that the number of your special additional deductions will be additionally increased by the difference from January to August 2023, in your September declaration. If there is still a difference, then you can adjust your figures and claim a refund when you do the annual IIT filling in 2024.
The special additional deductions are available for both domestic and expatriate employees, as long as they satisfy the standards of resident taxpayers. However, expatriate employees who choose to enjoy the additional special deduction will not be able to take advantage of the expatriate’s other allowances at the same time. You can find the details through our website link: Two extension policies on IIT in China bonus and allowances
For more information, please feel free to contact us.