Notice Of The State Administration Of Taxation On Administering And Levying Individual Income Tax On Additional Corporate Pensions
10 December 2009
To the local taxation bureaus in all provinces, autonomous regions, municipalities and separately planned cities as well as the offices of the State Administration of Taxation in Tibet, Ningxia and Qinghai provinces (autonomous regions):
To further regulate the administration and levy of individual income tax on additional corporate pensions in compliance with the "Individual Income Tax Law of the People's Republic of China" and its implementing regulations, the relevant matters are hereby announced as follows:
I. The additional corporate pensions contributed by individuals shall not be deducted from their monthly salaries or wages of the month in the course of calculating individual income tax liability.
II. The additional corporate pensions contributed by enterprises and transferred to individual accounts shall be treated as employment incomes and taxable for individual income tax purpose, and shall be deemed as individual salaries or wages of the month (not to be consolidated with normal salaries and wages) and become taxable in the "class of salaries and wages" without any deduction for individual income tax purpose. Individual income tax on such pensions shall be withheld and paid by enterprises.
Corporate contributions made by enterprises on a quarterly, bi-annually or annually basis shall not be divided for the corresponding months in calculation of tax liability, and shall be treated as salaries or wages of the month and taxed by applying the applicable tax rates for without any deduction individual income tax purpose.
III. The withheld and paid taxes on the additional pensions which have been transferred by enterprises to individual accounts but are not payable to the corresponding individuals in accordance with prescribed conditions shall be refunded based on the following formula:
Tax Refunds = Taxes Withheld and Paid by Enterprise x (1 - Actually Received Corporate Contributions / Total Taxed Corporate Contribution)
To obtain tax refunds, individuals who have joint additional pension schemes shall provide the subject taxation authorities with their identification documents, copies of the "Reports on Withholding and Paying Individual Income Tax on Additional Corporate Pensions", which is submitted by the enterprises in question for the previous month and specifies the individuals' particulars, and copies of the "Notice on Paid Tax" for the purpose of official tax transfer as well as the documents issued by the enterprises in question to prove the actual amount of the additional pensions payable by the enterprises to the individual in question and the balance of the taxed additional pensions contributed by the enterprises in question. The taxes may be refunded after the subject taxation authorities verify and approve the aforesaid documents.
IV. Enterprises which offer additional corporate pension schemes shall file the details of all the affected staff as well as total amount of the taxes withheld and paid in compliance with the Individual Income Tax Law and the relevant tax rules. Such enterprises shall improve their communications with their trustees and provide the information upon request by the subject taxation authorities. Acting in breach of the tax laws and regulations shall be subject to the penalties as specified in the Taxation Law.
V. The taxation authorities will not refund individual income tax on the corporate contributions which have been lawfully withheld and paid by enterprises before the promulgation of the Notice. Taxation authorities shall order the enterprises which have not withheld and paid individual income tax on the corporation contributions to withhold and pay such tax in accordance with the method that the taxable amount for the year shall be determined by the annual taxable income from the corporate contributions on which taxes not yet withheld and paid applying the rates which are also the tax rates for the average monthly salary for each staff in the year.
VI. For the purpose of this Notice, additional corporate pensions are the pensions voluntarily contributed by enterprises and their staff on top of the basic pension schemes in compliance with the "Trial Measures on Additional Corporate Pensions". Individuals who receive any other additional pensions not specified in this Notice shall be included into the salaries or wages in the month and full taxed for individual income tax purpose.
State Administration of Taxation
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