News & Insights

Adjustment of certain income types subject to Individual Income Tax

On 13 June 2019, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) promulgated the Announcement on Determination of Income Types subject to Individual Income Tax for Relevant Incomes Obtained by Individuals (关于个人取得有关收入适用个人所得税应税所得项目的公告) (Announcement 74). The purpose of Announcement 74 is to adjust the scope of certain taxable income types so that the relevant tax policies under the old Individual Income Tax Law (IIT Law) can continue after the amendment. Announcement 74 is effective from 1 January 2019.

According to Announcement 74, certain income originally taxable under the category of “other income” has been removed from the amended IIT Law and re-categorised into other currently still valid taxable income types with the tax rates/actual tax burden on the relevant income remaining unchanged.



Types of taxable income under the old IIT Law

Types of taxable income under the amended IIT Law

Tax rate


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

Other income

Contingent income



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

Other income

Contingent income



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



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



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.


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.

In addition to the above adjustments, certain tax policies regarding the “other income” type under the old IIT Law are abolished by Announcement 74.

Though Announcement 74 has not made substantial changes to the relevant tax policies, it shows that the MOF and SAT may, in accordance with the development and change of the economic and social situations, impose or exempt IIT on certain income in the future by adjusting the scope of taxable income types under the current effective IIT Law. As such, tax payers should not only familiarise with the provisions under the IIT Law and its implementation regulations but also pay close attention to the documents issued by the MOF and SAT in this regard.

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