18 August 2023
The Ministry of Finance and the State Taxation Administration (“the authorities”) issued the “Notice in Relation to the Implementation for Extension of the Annual One-0ff Bonus Policy for Individual Income Tax” (“the Notice”) on 18 August 2023. The authorities announced that to further alleviate the taxpayer’s burden, the annual one-off bonus received by the resident individuals shall not be included in the comprehensive income of the current year, instead, the income from the annual one-off bonus shall be divided by 12 months to determine the applicable tax rate and quick deduction with reference to the comprehensive tax rate table after conversion to month attached in this notice, which is used to calculate the tax payable. The formula is as follows:
Tax payable = Annual one-off bonus income x applicable tax rate – quick deduction
These Measures shall be valid until 31 December 2027.