Summary:
Recently, the State Administration of Taxation issued the announcement on the collection and management of individual income tax on equity investment and operation income (Announcement No. 41 of 2021) Announcement on the continuation of individual income tax preferential policies such as annual one-time bonus (Announcement No. 42 of 2021) and announcement on the continuation of individual income tax preferential policies such as foreign individual subsidies (Announcement No. 43 of 2021), This paper clarifies the public hot issues such as the collection method of individual income tax of sole proprietorship enterprises and partnership enterprises and the continuation of the current main preferential policies of individual income tax from the level of laws and regulations. The continuation of the preferential individual income tax policy reflects the spirit of benefiting the working class and continuing to encourage entrepreneurship, while further standardizing tax collection and management.
background
At the turn of the new year, the Ministry of Finance and the State Administration of Taxation jointly promulgated the following new policies that have a significant impact on China's individual income tax at the end of 2021.
December 30, 2021
Announcement No. 41 of 2021: for sole proprietorship enterprises and partnership enterprises holding equity investment 1, the audit collection method shall be applied to calculate and levy individual income tax from January 1, 2022.
December 31, 2021
Announcement No. 42 of 2021: the validity period of the preferential policies of separate taxation of annual one-time bonus and equity incentive of listed companies will be extended to December 31, 2023 and December 31, 2022 respectively.
Announcement No. 43 of 2021: extend the implementation period of preferential policies such as subsidies for foreign individuals to December 31, 2023.
Key points of concern
With regard to the changes in the collection method of individual income tax on operating income from equity investment, as of January 1, 2022, sole proprietorship enterprises and partnerships holding equity investment shall:
Individual income tax shall be calculated and levied in the way of audit collection;
Within 30 days from the date of holding equity investment, take the initiative to submit the information of holding equity investment to the tax authorities;
For the equity investment held before January 1, 2022, report the equity investment held to the tax authority before January 30, 2022, and adjust its collection method to audit collection.
