Q:
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What are the main personal tax issues that companies should focus on in 2021?
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A:
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1.
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Transition of tax-free benefit preferences for foreign individuals
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2.
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Change of preferential policy for annual lump sum bonus
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3.
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Change of social security policy implementation
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4.
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Tax considerations of the equity incentive program
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Q:
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What are the rules related to tax-free benefit benefits for foreign individuals?
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A:
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Under the current transitional tax policy, foreign resident individuals may choose to enjoy special additional deductions or the current tax exemptions for allowances such as housing allowance, language training fees, children's education fees, family visit fees and meal expenses in accordance with the regulations, but the two preferential policies may not be enjoyed at the same time. 2021 is the last year of the three-year transitional period, and from January 1, 2022, items that are duplicated in the two types of policies can only be enjoyed in accordance with the regulations Enjoy special additional deductions.
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Q:
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What are the changes for the annual lump sum bonus?
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A:
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The current transitional tax policy supports that annual lump-sum bonuses received by resident individuals may not be included in the current year's comprehensive income and be taxed separately for optimal tax liability. 2021 is the last year of the transitional period and from January 1, 2022, annual lump-sum bonuses received by resident individuals shall be included in the current year's comprehensive income for individual income tax calculation. However, for the annual lump-sum bonuses of separately and the corresponding preferential calculation method can be applied, and this calculation method is a long-term effective policy.
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Q:
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What are the changes in the implementation of social security policies?
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A:
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The era of "social security into tax", when all social security premiums are collected by the taxation department, has arrived, and the taxation bureau has made it easier to realize the tax declaration system with comparative data analysis for compliance management. For companies with insufficient number of contributors, insufficient contribution bases, insufficient types of insurance contributions, and different locations, they need to pay attention to the potential employment tax cost optimization solutions.
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Q:
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What are the tax considerations for equity incentive programs?
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A:
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Need to review the existing equity incentive plans to ensure that the initial plan filing and subsequent exercise filing of the equity incentive have been completed as required by the competent local tax authorities, and make timely corrections to the tax treatment of any non- compliance found; for the equity incentive plans of non-listed companies, companies listed with agreement control structure (such as VIE structure, i.e. variable interest entity structure), and companies with equity incentive plans through shareholding platforms, etc. atypical equity incentive programs, it is necessary to further communicate with the competent tax bureau to seek the application space of relevant policies; ensure that the calculation methods corresponding to different incentive types and taxpayers' resident status have been accurately used when carrying out the personal tax withholding obligations of equity incentive income.
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FAQ
