Individual Income Tax Deferral Policy Trialed in China
The Chinese government makes efforts on reducing the tax burden of employees. One of the measures is to make trial of the Individual Income Tax (“IIT”) deferral policies in some areas by allowing the employees to deduct the expenditures of purchasing commercial pension products from the taxable incomes for IIT purposes. This is based on the Notice on Implementing the Pilots on Individual Income Tax (“IIT”) Deferral of Commercial Pension with the number Caishui  No. 22 jointly issued by the PRC Ministry of Finance, Ministry of Human Resources and Social Security, China Bank and Insurance Regulatory Commission and China Securities Regulatory Commission on 2 April 2018. The pilot period started from 1 May 2018 and would last for one year. It can be expected that the validity period of such trial policy may be extended next year and the geographic coverage may gradually be expanded nationwide.
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