Taxation for Remuneration of Personal Services in China
The income from remuneration for personal services means income derived from individuals engaging in personal services, including income from design, decoration, installation, drafting, laboratory, testing, medical, legal, accounting, consulting, teaching, translation, reviewing, calligraphy and painting, sculpture, video, audio, performance, advertising, exhibition, technical services, introduction services, brokerage services, agency services, and other personal services.
1. Document proof for deduction before taxation
The costs for payment of remuneration for personal services are required to provide invoices to be deducted before taxation.
According to a Notice issued by the State Tax Bureau, if the payment of remuneration for personal services is less than RMB500, the receipt can be accepted for documentary proof for deduction before taxation.
2. Taxation basis
VAT is excluded from the taxation basis of remuneration income. The payment of VAT surcharges can be deducted from the income exclusive VAT in IIT calculation.
3. IIT withholding and payment
IIT is not levied in the application to issue invoices for individuals who provide personal services anymore, the remuneration payer is responsible for withholding and paying IIT.
4. Taxable income
The taxable income of remuneration is the balance of total income minus costs.
If the per remuneration income is less than RMB4,000, the deductable costs shall be RMB800; If the per remuneration income is more than RMB4,000, the deductable costs shall be 20% of the total income.
5. The same person obtain remuneration income for personal services several times within the same month
The income shall be regarded as one time if the remuneration income is lump-sum payment, otherwise the monthly income shall be regarded as one time if the consecutive income belongs to one project.
6. Remuneration income not reaching the IIT minimum threshold
The deductable costs shall be RMB800 if the per remuneration income is less than RMB4,000. The withholding IIT shall be zero If the remuneration payment is less than RMB800, however, the remuneration payer is still obliged to declare IIT for the individuals.
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