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Taxation - China

Question

Regulations on Personal Income Tax of Annual Lump Sum Bonus

Answer
The 2020 fiscal year is nearing its end and companies have started to prepare for year-end bonuses. According to the relevant provisions of the new Individual Income Tax Law, the preferential policy of annual lump-sum bonus is still available this year and will continue until December 31, 2021. What are the specific rules regarding the personal taxation of year-end awards.

Q: What is included in the annual lump sum bonus?
A: The annual lump sum bonus includes year-end salary increase, annual salary and performance pay that are cashed out by the units implementing the annual salary system and performance pay approach based on the assessment.

Q:
Whether the annual lump sum bonus must be calculated separately for tax purposes?
A:
The decision of whether to include the annual lump sum bonus in the current year's comprehensive income can be made based on the employee's annual income.

Q:
Is there a time limit for the use of the annual lump sum bonus?
A:
Only one separate tax calculation is allowed for each taxpayer in a tax year

Q:
Whether non-resident individuals are eligible for annual lump sum bonus incentives?
A:
If there is a message that is no longer valid, it can be deleted and then confirmed.

Q:
What is Months of Bonus?
A:
Months of bonus is the income from wages and salaries such as bonuses, year-end salary increases or dividends that are attributed to several months at a time for residents without residence.

Q:
Are there incentives for several months bonus?
A:
Non-resident individuals who have received several months of bonuses in a month, separately in accordance with the provisions of Article 2 of this announcement to calculate the amount of income for the month, not combined with other wages and salaries for the month

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