China to cut tax burden on families

▶ Ministry releases many deductable expenditures

China is seeking to lower tax burden on families, mulling several tax deductable expenditures, including education and healthcare, in the country’s new personal tax system, which is undergoing deep reforms, according to an initial reform plan released on Saturday.

The move is in line with China’s overall efforts to overhaul its tax code to reduce the tax burden for companies and families to improve people’s livelihood.

Under the plan released by the Ministry of Finance and the State Administration of Taxation along with other agencies, families could file for tax deductions for expenditures in a number of expenditures, including education, healthcare, mortgage interests, rentals as well as elderly care.

The government agencies are seeking public comments on the initial plan starting on Saturday for the reform plan, which is scheduled to take effect starting on January 1, 2019, the Xinhua News Agency reported. The reform plan with the tax deductibles are based on fair principles and aimed at simplifying the tax code, reducing tax burdens and improving people’s livelihood.

Specifically, families could deduct as much as 16,800 yuan ($2,424.56) a year from their taxable income for education, both for the tax-payer themselves or their children, according to the plan. Taxpayers can also deduct up to 60,000 yuan a year from their medical bills that exceed 15,000 yuan.

For housing, families that took out a mortgage for their first home could file for deduction of 1,000 yuan each month and taxpayers who rent homes could file for a deduction of between 800 yuan and 1,200 yuan depending on the city they live in. For elderly care, taxpayers who support elderly people over 60 years old could file for tax deduction of 2,000 yuan every month.

The move, along with a series of other measures to reduce tax burdens on families, is part of Chinese government’s broad efforts to create a better business environment and improve peoples’ lives, officials have said.

A 28-year-old white collar worker in Beijing surnamed Huang said that after the new policy took effect, she will pay about 100 yuan less in individual income tax every month. “The new rule is a positive sign that more tax reforms will be carried out in the future,” she noted.