Adjustment of certain income types subject to Individual Income Tax

Income

Types of taxable income under the old IIT Law

Types of taxable income under the amended IIT Law

Tax rate

1

Income derived by an individual from the provision of guarantee for an entity or another individual

Other income

Contingent income

20%

2

Gift income derived by the recipient from receiving gift property from its owner without consideration (Note (a))

Other income

Contingent income

20%

3

Gift obtained by an individual randomly from an enterprise in business promotion and advertising activities etc. (including online red packet, same hereinafter), or at its annual meetings, forums, celebration events and other activities (Note (b))

Other income

Contingent income

20%

4

Pension derived by an individual from tax-deferred commercial pension insurance pursuant to the provisions of the Notice on Launch of Pilot Scheme of Individual Tax-Deferred Commercial Pension Insurance

Other income

Wage and salary income

Of these, 25%  are exempt from tax; with the remaining 75%  subject to IIT at 10% proportional tax rate

(a)

The gift income derived by the recipient of the gifted property from its owner will not be subject to any IIT under the following circumstances:–

• The property owner gifts the property to his/her statutory heir, or paternal grandchildren or maternal grandchildren without consideration;
• The property owner gifts the property to a guardian or custodian who bears direct guardianship or custodianship over him/her without consideration; or
• The property owner passed away and his/her statutory heir or testamentary beneficiary or devisee obtains the property pursuant to the law.

(b)

This provision does not apply if (i) the individual is an insider of the enterprise; or (ii) the gifts given by the enterprise are spending vouchers, gift vouchers, discount vouchers and other gifts with a price reduction or discount nature.