the implementation of the tax law is directly related to our vital interests, so many people pay more attention to it. Will the current year-end bonus tax calculation method be changed? The Ministry of finance today issued the notice on the connection of preferential policies after the amendment of the individual income tax law, which gives a detailed description of the annual one-off bonus, the annual performance salary of the head of the central enterprise extended to cash in the income, the term of office award and other policies.
How to calculate the year-end bonus of the new tax law
The new tax law will come into effect on New Year's day. Many netizens are concerned about whether the current year-end bonus tax calculation method will change? The Ministry of finance today issued the notice on the connection of preferential policies after the amendment of the individual income tax law, which detailed the policies such as one-time bonus for the whole year, deferred cash in of annual performance salary of the person in charge of the central enterprise and term award.
1、 Policy on one-time bonus for the whole year, deferred income and term of office Award for the annual performance salary of the person in charge of the central enterprise
（1） The annual lump sum bonus obtained by individual residents is in line with the provisions of the notice of the State Administration of Taxation on adjusting the method of calculating and levying personal income tax for individuals to obtain the annual lump sum bonus (GSF [2005] No. 9). Before December 31, 2021, it will not be incorporated into the comprehensive income of the year. The amount obtained by dividing the annual lump sum bonus income by 12 months is in accordance with the attached notice According to the monthly comprehensive income tax rate table (hereinafter referred to as the monthly tax rate table), determine the applicable tax rate and quick calculation deduction, and calculate the tax separately. The calculation formula is:
Tax payable = annual one-off bonus income & times; applicable tax rate - quick calculation deduction
If individual residents obtain one-off bonus for the whole year, they may also choose to incorporate it into the comprehensive income of the current year for calculation and tax payment.
Since January 1, 2022, when individual residents obtain one-time bonus for the whole year, they shall be incorporated into the comprehensive income of the current year to calculate and pay individual income tax.
Consolidated income tax rate table after monthly conversion
（2） If the person in charge of a central enterprise obtains the income from the deferred payment of annual performance salary and the reward for the term of office, and it is in conformity with the provisions of the notice of the State Administration of Taxation on the issue of Levying Individual Income Tax on the income from the deferred payment of annual performance salary and the reward for the term of office of the person in charge of a central enterprise (GSF [2007] No. 118), it shall be implemented with reference to item (1) of Article 1 of this notice before December 31, 2021; The policy after January 1, 2022 is otherwise clear.
2、 On the equity incentive policies of listed companies
（1） The equity incentives (hereinafter referred to as equity incentives) for individual residents to obtain stock options, stock appreciation rights, restricted stocks, equity awards, etc., are in line with the Ministry of finance Circular of the State Administration of Taxation on the collection of individual income tax on the income from individual stock options (CS [2005] No. 35), Circular of the Ministry of Finance and the State Administration of Taxation on the collection of individual income tax on the income from stock appreciation right and restricted stock income (CS [2009] No. 5), Ministry of Finance Article 4 of the Circular of the State Administration of Taxation on the promotion of the relevant tax pilot policies of the national independent innovation demonstration zone to the nationwide implementation (CS [2015] No. 116) and Article 4 (1) of the Circular of the Ministry of Finance and the State Administration of Taxation on the improvement of the relevant income tax policies on equity incentive and technology equity investment (CS [2016] No. 101), before December 31, 2021 , not included in the comprehensive income of the current year, the comprehensive income tax rate table shall be separately applied to calculate and pay taxes in full. The calculation formula is:
Tax payable = equity incentive income & times; applicable tax rate - quick calculation deduction
（2） If a resident individual obtains more than two (including two) equity incentives in a tax year, the tax shall be calculated and paid in accordance with the provisions of item (1) of Article 2 of this circular.
（3） The equity incentive policy after January 1, 2022 will be specified separately.
3、 Policy on commission income of insurance salesmen and securities brokers
The commission income obtained by insurance salesmen and securities brokers belongs to the income of labor remuneration. The balance of the income excluding value-added tax after deducting 20% of the expenses is the income amount. After deducting the business development cost and additional taxes, the income amount is incorporated into the comprehensive income of the current year and the individual income tax is calculated and paid. The exhibition cost of insurance marketers and securities brokers is calculated as 25% of the income.
When the withholding agent pays commission income to the insurance marketer and securities broker, the withholding tax shall be calculated in accordance with the cumulative withholding method specified in the administrative measures for withholding and declaration of individual income tax (Trial) (announcement of the State Administration of Taxation No. 61, 2018).
4、 Policies on individual receiving enterprise annuity and occupational annuity
The enterprise annuity and occupational annuity received by an individual who has reached the retirement age prescribed by the State shall not be included in the comprehensive income and shall be calculated separately in full amount if they meet the provisions of the notice of the Ministry of finance, the Ministry of human resources and social security, and the State Administration of Taxation on issues related to the individual income tax of the enterprise annuity (CS [2013] No. 103). Among them, the monthly tax rate table shall be applied to calculate the tax payment for those received monthly; the monthly tax rate table shall be applied to calculate the tax payment for those received quarterly, and the average apportionment shall be included in each month; the comprehensive income tax rate table shall be applied to calculate the tax payment for those received yearly.
The balance of the annuity personal account that an individual receives at one time due to his / her settlement abroad, or the annuity personal account that his / her designated beneficiary or legal heir receives at one time after his / her death, shall be calculated and taxed according to the comprehensive income tax rate table. If an individual receives the funds or balance of an annuity individual account at one time except for the above special reasons, the monthly tax rate table shall be applied to calculate and pay tax.
5、 The policy of one-off compensation income for termination of labor relations, early retirement and internal retirement
（1） Individual and employer get one-time compensation income (including economic compensation, living allowance and other subsidies) from the termination of labor relationship, and the part within 3 times of the average wage of local employees in the previous year is exempt from individual income tax; the part exceeding 3 times is not included in the comprehensive income of the current year, and the comprehensive income tax rate table is separately applied to calculate and pay tax.
（2） The one-time subsidy income obtained by an individual through the early retirement procedures shall be evenly apportioned according to the actual number of years between the early retirement procedures and the legal retirement age, the applicable tax rate and the quick calculation deduction shall be determined, and the comprehensive income tax rate table shall be separately applied to calculate the tax payment. Calculation formula: taxable amount = {[(actual number of years when one-time subsidy income & divide; goes through early retirement procedures to the legal retirement age) - expense deduction standard] & times; applicable tax rate - quick calculation deduction number} & times; actual number of years when going through early retirement procedures to the legal retirement age
（3） The one-time subsidy income obtained by individuals through internal retirement procedures shall be calculated and taxed in accordance with the provisions of the notice of the State Administration of Taxation on policy issues related to individual income tax (GSF [1999] No. 58).
6、 Policies on selling houses to employees at low prices
The unit sells the housing to the employees at a price lower than the purchase or construction cost, and the difference part of the employees' less expenses is in line with the Ministry of finance According to Article 2 of the Circular of the State Administration of Taxation on the issue of personal income tax related to the unit selling houses to employees at a low price (CS [2007] No. 13), it is not incorporated into the comprehensive income of the current year. The amount obtained by dividing the difference income by 12 months is used to determine the applicable tax rate and the quick calculation deduction according to the monthly tax rate table, and the tax is calculated separately. The calculation formula is:
Tax payable = the difference between the purchase price actually paid by the employee and the purchase or construction cost of the house
7、 Policies on subsidies for foreign individuals
（1） During the period from January 1, 2019 to December 31, 2021, if foreign individuals meet the personal conditions of residents, they can choose to enjoy the special additional deduction of personal income tax, or they can choose to enjoy the exemption of personal income tax according to the notice of the Ministry of Finance and the State Administration of Taxation on several policy issues of personal income tax (CS [1994] No. 20), the notice of the State Administration of Taxation on foreign individuals obtaining relevant subsidies Notice on tax implementation (GSF [1997] No. 54) and notice of the Ministry of Finance and the State Administration of Taxation on the exemption of individual income tax for foreign individuals to obtain housing and other subsidies in Hong Kong and Macao (CS [2004] No. 29) stipulate that they shall enjoy the preferential policies of housing subsidies, language training fees, children's education fees and other subsidies, but not enjoy them at the same time. Once a foreign individual is selected, it shall not be changed within one tax year.
（2） From January 1, 2022, foreign individuals will no longer enjoy the tax-free preferential policies of housing subsidies, language training fees, children's education subsidies, and shall enjoy special additional deductions according to the regulations.
8、 In addition to the above items, other preferential policies for individual income tax shall continue to be implemented in accordance with the provisions of the original document.
9、 This notice shall be implemented as of January 1, 2019. The following documents or document terms shall be repealed at the same time:
（1） Article 1 of the notice of the Ministry of Finance and the State Administration of Taxation on the issue of levying and exempting individual income tax on the one-time compensation income obtained from the termination of labor relations between individuals and employers (CS [2001] No. 157);
（2） Article 4 (1) of the Circular of the Ministry of Finance and the State Administration of Taxation on the collection of individual income tax on the income from individual stock options (CS [2005] No. 35);
（3） Article 3 of the notice of the Ministry of Finance and the State Administration of Taxation on the issue of individual income tax related to the unit selling houses to employees at a low price (CS [2007] No. 13);
（4） Notice of the Ministry of finance, the Ministry of human resources and social security, the State Administration of Taxation on issues related to individual income tax of occupational annuity of enterprise (CS [2013] No. 103), Article 3, items 1 and 3;
（5） Notice of the State Administration of Taxation on the issue of levying personal income tax on the discount or subsidy income obtained from the employer for individuals to subscribe for stocks and other securities (GSF [1998] No. 9);
（6） Notice of the State Administration of Taxation on the issue of Levying Individual Income Tax on the income obtained by marketers (non employees) of insurance enterprises (GSF [1998] No. 13);
（7） Notice of the State Administration of Taxation on the issue of Levying Individual Income Tax on economic compensation obtained by individuals due to the termination of labor contracts (GSF [1999] No. 178);
（8） Notice of the State Administration of Taxation on the issue of exemption of individual income tax from one-off compensation income obtained by employees of state-owned enterprises due to termination of labor contract (GSF [2000] No. 77);
（9） Article 2 of the notice of the State Administration of Taxation on adjusting the method of calculating and Levying Individual Income Tax for individuals to obtain one-off bonus for the whole year (GSF [2005] No. 9);
（10） Notice of the State Administration of Taxation on the issue of exemption from individual income tax on commission income obtained by insurance Marketers (GSH [2006] No. 454);
（11） Article 7 and Article 8 of the supplementary notice of the State Administration of Taxation on the payment of individual income tax on individual stock option income (GSH [2006] No. 902);
（12） Article 1 of the notice of the State Administration of Taxation on the issue of Levying Individual Income Tax on the extension of the annual performance salary of the head of the central enterprise and the reward for the term of office (GSF [2007] No. 118);
（13） Article 2 of the announcement of the State Administration of Taxation on the issue of individual income tax on the subsidy income obtained from early retirement of individuals (Announcement No. 6, 2011 of the State Administration of Taxation);
（14） Announcement of the State Administration of Taxation on Levying Individual Income Tax on commission income of securities brokers (Announcement No. 45, 2012 of the State Administration of Taxation).
Related recommendations
Full text of regulations for the implementation of the new personal tax law of 2019
Rules for the Implementation of the Law of the People's Republic of China on Individual Income Tax
(January 28, 1994)