China's reduction in individual income tax has notably eased the burden on low-income groups, with over 70 percent of individuals having comprehensive income exempt from taxation in 2023, according to the data released by the State Taxation Administration on Tuesday.
According to the data, among the remaining less than 30 percent individuals who paid taxes in 2023, over 60 percent were subject to the lowest tax bracket of three percent.
China voted to adopt the revised Individual Income Tax Law in 2018 in an effort to pursue fairer income distribution.
The new law states that the minimum threshold for personal income tax exemption will be raised from 3,500 yuan (about 492 U.S. dollars) to 5,000 yuan (about 703 U.S. dollars) per month.
China's special individual income tax deductions are designed to lower the tax burden for those who have certain expenditures covering areas such as children's education, continuing education, medical treatment for serious diseases, housing loans, rent and elderly care.
"The individual income tax deduction has played an effective role in benefiting low-income groups. The tax payments based on comprehensive income have shown that the low-income groups pay little or no taxes thanks to the tax reform," said Li Ping, deputy director with the Institute of Tax Science of the administration.
"The 5,000 yuan threshold for personal income tax exemption stands at a comparatively high level globally, and can sufficiently cover the basic consumption expenditures. The current deductions for individual income tax in our country have evolved into a relatively comprehensive system, taking into account taxpayers' tax-paying capacity while also aligning with the nation's social and economic policies," said Li.
China's individual income tax reduction significantly alleviates burden on low-income groups
