For the purpose of implementing the newly issued Circular of the State Council on Establishing Itemized Deductions for Specific Expenditures of Individual Income Tax on Care of Children Under the Age of Three (Guofa [2022] No.8) and ensuring the smooth implementation of the policy with respect to itemized deductions for specific expenditures of individual income tax on care of children under the age of three, the State Taxation Administration has revised the Proposed Measures for Itemized Deductions for Specific Expenditures of Individual Income Tax and Withholding Return for Individual Income Tax, which are hereby announced and shall enter into force from January 1, 2022. Announcement of State Taxation Administration on Issuing the Proposed Measures for Itemized Deductions for Specific Expenditures of Individual Income Tax ([2018] No.60) and Annex 2 to Announcement of the State Taxation Administration on Revising Individual Income Tax Returns ([2019] No.7) are hereby repealed simultaneously.

It is hereby announced.

Annexes:

1. Information Form for Itemized Deductions for Specific Expenditures of Individual Income Tax.docx

2. Withholding Return for Individual Income Tax.docx

State Taxation Administration

March 25, 2022

Proposed Measures for Itemized Deductions for Specific Expenditures of Individual Income Tax

Chapter I   General Provisions

Article 1 To regulate the itemized deductions for specific expenditures of individual income tax and protect the legitimate rights and interests of taxpayers , the Measures are formulated in accordance with Individual Income Tax Law of the People’s Republic of China and its Implementation Regulations, Tax Collection and Administration Law of the People’s Republic of China and its Implementation Rules, Circular of the State Council on Issuing the Proposed Measures for Itemized Deductions for Specific Expenditures of Individual Income Tax (Guofa [2018] No.41), and Circular of the State Council on Establishing Itemized Deductions for Specific Expenditures of Individual Income Tax on Care of Children Under the Age of Three (Guofa.[2022] No.8).

Article 2 Taxpayers who enjoy itemized deductions for specific expenditures on children’s education, continuing education, medical treatment for serious illness, housing loan interest or housing rent, supporting the elderly, and care of children under the age of three shall file in accordance with the Measures.

Chapter II   Conditions and Periods for Enjoying the Deductions

Article 3 The periods for taxpayers to enjoy itemized deductions for specific expenditures that meet the provisions shall be calculated as follows:

(1) Children’s education. For pre-school education, the period shall be calculated from the month when the taxpayer’s child reaches the age of three to the month before the child attends primary school. For academic education, the period shall be calculated from the month when the child receives full-time academic education to the month when such education ends.

(2) Continuing education. For continuing academic (degree) education, the period shall be from the month when the taxpayer begins to receive academic (degree) education inside China to the month when such education ends. The deduction period for the same continuing academic qualification (degree) education shall not exceed 48 months. For the continuing education for professional qualification of skilled personnel or specialized technicians, the period shall be the year when relevant certificates are obtained.

(3) Medical treatment for serious illness. The deduction period shall be the year when such medical expenses are actually incurred as recorded in the medical insurance information system. 

(4) Housing loan interest. The period shall be from the month when the taxpayer begins to repay his/her loan according to the housing loan contract to the month when the loan is fully paid or the housing loan contract is terminated and the maximum period of deduction shall not exceed 240 months.

(5) Housing rent. The deduction period shall be from the month when the lease begins to the month when the lease ends according to the leasing contract (agreement) of the house. In case of early termination of the contract (agreement), the actual leasing period shall apply.

(6) Supporting the elderly. The deduction period shall be from the month when the dependent supported by the taxpayer reaches the age of 60 to the end of the year when the supporting obligation is terminated.

(7) Care of children under the age of three. The deduction period shall be from the month when the child is born to the month before the child reaches the age of three.

The period of academic education and continuing academic (degree) education as prescribed in subparagraphs (1) and (2) of the preceding paragraphs shall include the period during which the taxpayer suspends the schooling due to illness or for other non-subjective reasons while keeping the status as a student, and shall include school holidays including winter and summer vacations organized and implemented by educational institutions according to relevant regulations.

Article 4 The taxpayer who enjoys itemized deductions for specific expenditures on children’s education, continuing education, housing loan interest or housing rents, supporting the elderly, and care of children under the age of three may choose to submit relevant information of aforesaid itemized deductions for specific expenditures to the withholding agent that makes payment of wages and salaries since the conditions are met, and the withholding agent, when withholding and prepaying taxes, shall handle the deduction of the accumulated deductibles that the taxpayer is allowed to claim for the current year in the institution. The taxpayer may also choose to apply for deductions when filing the annual tax reconciliation return to the tax authority in charge during the period from March 1of the next year to June 30 of the next year. 

Where the taxpayer obtains income from salary and wages from two or more sources, and requires his/her withholding agents to handle the aforesaid itemized deductions for specific expenditures, for one itemized deduction for specific expenditures, the taxpayer can only select one source to deduct in a tax year.

The taxpayer who enjoys itemized deductions for specific expenditures on medical treatment of serious illness shall, during the period from March 1 of the next year to June 30 of the next year, apply for the deduction when filing the annual tax reconciliation tax return with the tax authority in charge. 

Article 5 When withholding and prepaying taxes on the income from salary and wages, the withholding agent shall handle itemized deductions for specific expenditures for taxpayers based on the Information Form for Itemized Deductions for Specific Expenditures of Individual Income Tax (hereinafter referred to as “Information Form for Deductions”, see Annex). 

Where the taxpayer changes jobs in the middle of a year, the amount of itemized deductions for specific expenditures enjoyed during his/her previous employment shall not be deducted again at the new place of employment. The former withholding agent shall stop handling taxpayer’s itemized deductions for specific expenditures from the month when it stops to pay salary and wages to the taxpayer. 

Article 6 Where the taxpayer who does not obtain income from salary and wages and only obtains income from remuneration for personal services, author’s remuneration, and royalties needs to enjoy itemized deductions for specific expenditures, he/she shall submit the Information Form for Deductions to the tax authority in charge and apply for deductions when filing the annual tax reconciliation during the period from March 1 of the next year to June 30 of the next year 

Article 7 Where the taxpayer fails to enjoy the deductions or fails to enjoy the deductions in full when the withholding agents withholds and prepays taxes within a tax year, the taxpayer may apply within the year to the withholding agent which makes the payment of salary and wages for supplementary deductions when salary and wages are paid in the remaining months of the year. The taxpayer may also apply for deductions when filing the annual tax reconciliation with the tax authority in charge during the period from March 1of the next year to June 30 of the next year.

Chapter III   Information Submission and Materials Retained for Future Inquiry

Article 8 Where the taxpayer chooses to enjoy itemized deductions for specific expenditures when the withholding agent pays salary and wages, he/she shall file the Information Form for Deductions with the withholding agent when enjoying for the first time. If relevant information changes during a tax year, the taxpayer shall update the information in the corresponding columns of the Information Form for Deductions and submit it to the withholding agent promptly. 

Where the taxpayer changes jobs and requires the new withholding agent to handle itemized deductions for specific expenditures, he/she shall file the Information Form for Deductions with the withholding agent within the month when he/she become employed. 

Article 9 Where the taxpayer requires the withholding agent to continue to handle itemized deductions for specific expenditures for the next year, he/she shall confirm the contents of itemized deductions for specific expenditures for next year in December and submit to the withholding agent. Where the taxpayer fails to make confirmation promptly, the withholding agent shall suspend the deduction from January of the next year and may not resume itemized deductions for specific expenditures until the taxpayer makes confirmation.

The withholding agent shall submit to the tax authority in charge the information on itemized deductions for specific expenditures submitted by taxpayers when filing withholding returns in the next month. 

Article 10 Where the taxpayer chooses to enjoy itemized deductions for specific expenditures when filing the annual tax reconciliation return, he/she shall file the Information Form for Deductions with the tax authority in charge. 

Article 11 The taxpayer shall provide the information on itemized deductions for specific expenditures he/she claims in the corresponding columns of the Information Form for Deductions. If the information filled in the form is complete, the withholding agent or the tax authority in charge shall accept the claim. If the information is incomplete, the withholding agent or the tax authority in charge shall notify the taxpayer to make supplements or corrections or complete a new form promptly. If the taxpayer fails to make supplements or corrections or complete a new form, relevant itemized deductions for specific expenditures shall not be deducted for the time being until the taxpayer has made the supplements and corrections or completed a new form. 

Article 12 To enjoy itemized deductions for specific expenditures on children’s education, the taxpayer shall fill in information including the names, ID types and numbers of his/her spouse and child (or children), education stage(s) of his/her child (or children) and starting/ending time, school name(s) of his/her child (or children), and the proportions of deduction allocated to the taxpayer and his/her spouse.

Materials that need to be retained by the taxpayer for future inquiry shall include the following: where the taxpayer’s child (or children) receives education overseas, he/she shall keep the materials proving the overseas education background, including the admission letter issued by the overseas school and his/her student visa. 

Article 13 To enjoy itemized deductions for specific expenditures on continuing education, if the taxpayer receives continuing academic (degree) education, he/she shall provide information including the starting/ending time of education and the education stage. If the taxpayer receives continuing education for professional qualifications of skilled personnel or specialized technicians, he/she shall provide information including the name and code of the qualification certificate, certificate-issuing authority, and the date of issuance (approval).

Materials that need to be retained by the taxpayer for future inquiry shall include the following: where the taxpayer receives continuing education for professional qualifications of skilled personnel or continuing education for professional qualifications of specialized technicians, he/she shall retain relevant certificates on professional qualifications. 

Article 14 To enjoy itemized deductions for specific expenditures on housing loan interest, the taxpayer shall provide information including house ownership, house location, loan method, lending bank, serial number of the loan contract, loan term, and first installment payment date. If the taxpayer has a spouse, the spouse’s name, ID type and number shall be provided.

Materials that need to be retained by the taxpayer for future inquiry shall include housing loan contract, loan repayment certificate.

Article 15 To enjoy itemized deductions for specific expenditures on housing rent, the taxpayer shall provide information including his/her main working city, the location of the rental house, the lessor’s name, ID type and number, or the name or taxpayer identification number (unified social credit code) of the leasing institution, and the starting and ending time of the lease. If the taxpayer has a spouse, the spouse’s name, ID type and number shall be provided.

Materials that need to be retained by the taxpayer for future inquiry shall include the housing rental contract or agreement.

Article 16 To enjoy itemized deductions for specific expenditures on supporting the elderly, the taxpayer shall provide information including whether the taxpayer is an only child, the amount of monthly deductions, the dependent’s name, ID type and number, and the relationship with the taxpayer. Where there are co-supporters, taxpayers shall provide information including the method of sharing deductions, each co-supporter’s name, and ID type and number.

Materials that need to be retained by the taxpayer for future inquiry shall include the written agreement on how to share deductions.

Article 17 To enjoy itemized deductions for specific expenditures on medical treatment for serious illness, the taxpayer shall provide information including the patient’s name, ID type and number, the relationship with the taxpayer, the total amount of medical expenses related to basic medical insurance, and the amount of self-payment afforded by individuals within the scope of the medical insurance catalog.

Materials that need to be retained by the taxpayer for future inquiry shall include the originals or photocopies of relevant bills for medical service charges and medical insurance reimbursement for patients with serious illnesses, or lists of medical expenses for the tax year issued by the healthcare security department.

Article 18 To enjoy itemized deductions for specific expenditures on care of children under the age of three, the taxpayer shall provide information including the names of his/her spouse and child (or children), their ID types (such as resident ID cards, medical certificates of birth of children) and numbers, and the proportions of deduction allocated to the taxpayer and his/her spouse.

Materials that need to be retained by the taxpayer for future inquiry shall include the children’s medical certificates of birth.

Article 19 Taxpayers shall be responsible for the authenticity, accuracy and completeness of the information submitted on itemized deductions for specific expenditures.

Chapter IV   Methods of Information Submission

Article 20 The taxpayer may submit the information on itemized deductions for specific expenditures to the withholding agent or the tax authority in charge through remote tax service terminals, electronic or paper statements or other methods.

Article 21 Where the taxpayer chooses to handle itemized deductions for specific expenditures through the withholding agent in a tax year, the following provisions shall apply:

(1) Where the taxpayer selects the withholding agent and submits itemized deductions for specific expenditures information through remote online portals, the withholding agent shall complete the deductions according to the deduction information received.

(2) Where the taxpayer submits the electronic or paper Information Form for Deductions directly to the withholding agent, the withholding agent shall import or input relevant information to the tax withholding software and submit it to the tax authority in charge during tax withholding and payment in the following month. The Information Form for Deductions shall be submitted in duplicate, with each copy signed (sealed) and retained for future inquiry by the taxpayer and withholding agent respectively.

Article 22 Where the taxpayer chooses to enjoy itemized deductions for specific expenditures through annual tax reconciliation return after the end of a tax year, he/she may either submit his/her information on the itemized deductions for specific expenditures through remote online terminals, or submit the electronic or paper Information Form for Deductions (in duplicate) to the tax authority in charge at the place where the annual tax reconciliation return is filed.

Where the electronic Information Form for Deductions is submitted, the tax authority in charge shall accept and print it, which shall, after being signed by the taxpayer, be retained by the taxpayer for future inquiry and the tax authority respectively. Where the paper Information Form for Deductions is submitted in duplicate, after signed for confirmation by the taxpayer and signed and sealed by the tax authority in charge for acceptance, one copy shall be returned to the taxpayer for future inquiry and the other shall be retained by the tax authority.   

Article 23 Withholding agents and tax authorities shall inform taxpayers of the methods and channels of filing itemized deductions for specific expenditures, and encourage and guide taxpayers to submit information through remote online terminals.

Chapter V   Follow-up Administration

Article 24 The taxpayer shall preserve the Information Form for Deductions and the related materials for future inquiry for five years since the end of the statutory annual tax reconciliation period.

The withholding agent shall retain the Information Form for Deductions submitted by the taxpayer to the withholding agent for five years starting from the following year of withholding.

Article 25 Where the taxpayer provides the withholding agent with information on his/her itemized deductions for specific expenditures, the withholding agent shall deduct relevant items in accordance with the regulations and shall not refuse the request. The withholding agent shall keep the information on itemized deductions for specific expenditures submitted by the taxpayers confidential.

Article 26 The withholding agent shall file withholding returns promptly based on the information provided by the taxpayers. The withholding agent shall not change the information provided by the taxpayers without authorization.

The withholding agent may request the taxpayer to make modifications when finding that the information provided by a taxpayer is inconsistent with the actual situation. Where the taxpayer refuses to make modifications, the withholding agent shall report to the tax authority and the tax authority shall handle it in a timely manner.

Unless otherwise requested by the taxpayer, the withholding agent shall, within two months after the end of the year, provide the taxpayer with information on the items and amounts of itemized deductions for specific expenditures that have been filed.

Article 27 Tax authorities shall regularly conduct random checks on the information on itemized deductions for specific expenditures provided by the taxpayers.

Article 28 Where the taxpayer fails to provide the relevant materials retained for future inquiry, or such materials cannot prove relevant situations when the tax authority conducts checks, the tax authority may require the taxpayer to provide other supporting materials. Where a taxpayer fails to provide other supporting materials or the supporting materials are still insufficient to prove, the taxpayer shall not be allowed to enjoy relevant itemized deductions for specific expenditures.

Article 29 When tax authorities conduct checks on itemized deductions for specific expenditures, they may request relevant institutions and individuals for assistance, and relevant institutions and individuals shall assist.

Article 30 Where the taxpayer falls under any of the following circumstances, the tax authority in charge shall order the taxpayer to make rectification. Where circumstances are serious, relevant departments shall incorporate relevant information into the credit information system and implement joint sanctions in accordance with relevant regulations issued by the state. Where there are violations of laws and regulations including Tax Collection and Administration Law of the People’s Republic of China, tax authorities shall handle the cases in accordance with the law:

(1) Submitting false information on itemized deductions for specific expenditures;

(2) Claiming itemized deductions for specific expenditures repeatedly;

(3) Claiming itemized deductions for specific expenditures beyond the scope or standard;

(4) Refusing to provide related materials for future inquiry;

(5) Other circumstances prescribed by the State Taxation Administration. 

Where the taxpayer submits false information on deductions at the place of employment, the tax authority may order the taxpayer to make rectification and inform the withholding agent.

Article 31 The Measures shall enter into force from January 1, 2022.

All information in this document is authentic in Chinese. English is provided for reference only. In case of any discrepancy, the Chinese version shall prevail.