Individual income tax, is it going to change?

UBM Finance

2024-06-24 18:20Posted on the official account of Guangdong Shenzhen Tiantian Saying Money Investment Consulting Co., Ltd

Original Liu Xiaobo

Two of the most compelling financial news stories today:

First, the three major exchanges resumed IPOs, and the Shanghai Composite Index fell below 3,000 points.

Second, the "Income Tax Details" of the individual income tax app has added 5 new items. The details are as follows:

This article focuses on the analysis of individual income tax issues.

There are 5 new items in the "Income Tax Details", and most people don't understand its exact meaning, but they will put a question mark in their hearts: Is this going to increase taxes?

A reporter interviewed the "State Administration of Taxation 12366 tax service platform", and the reply of the customer service staff was: the five personal income items are indeed new display items this year, mainly to allow people with the above personal income to query income and individual income tax details on the individual income tax APP. The five newly displayed personal income are mainly for inquiry and display, and do not change the method of final settlement.

If you pay more attention to policy, you will know that the core topic of the important meeting to be held in July is to promote a new round of reform, and the reform of the fiscal and taxation system is an important part of it.

At the Central Economic Work Conference held in December last year, the official also proposed that a new round of reform of the fiscal and taxation system should be planned.

At this year's National People's Congress and the National People's Congress, the Ministry of Finance submitted a report on the implementation of the budget at the National People's Congress, which further conveyed the direction of the upcoming new round of fiscal and taxation system reform. The report says:

Implement the deployment requirements of the CPC Central Committee and the State Council, adhere to goal-oriented and problem-oriented, plan a new round of fiscal and taxation system reform, and establish and improve a modern financial system that is compatible with Chinese-style modernization. On the premise of maintaining the stability of the macroeconomic tax burden and the basic tax system, we should further improve the tax system, optimize the tax structure, study and improve the local tax system, promote the reform of consumption tax, and improve the value-added tax system.

After understanding these backgrounds, you will know that further optimization of the individual income tax system is the trend of the times.

The last round of IIT reform was completed in 2018, when the seventh "overhaul" of the Individual Income Tax Law was carried out, and a comprehensive and categorical individual income tax system was introduced.

The Individual Income Tax Law divides personal income into 9 categories:

Among them, the first four categories - income from wages and salaries, income from labor services, income from author's remuneration and income from royalties are combined into comprehensive income, and 7 levels of progressive tax rates are applied and levied on an annual basis. Therefore, we can only see 4 items in the "Income Tax Details" on the individual income tax APP.

To put it bluntly, these four packages constitute "comprehensive income" and are taxed together.

The other 5 items are taxed by classification, which are divided into two groups, of which "business income" is levied according to the 5-level excess progressive tax rate (up to 35%); The other 4 items of income are taxed at a proportional rate of 20%.

On the official account of the "Tax Research" magazine supervised by the State Administration of Taxation, an article entitled "Countermeasures and Suggestions for Further Optimizing the Combination of Comprehensive and Classified Individual Income Tax" was published, which analyzed the five major problems of the last round of individual income tax reform (2018), and the first one was: "The degree of tax system integration needs to be further improved".

It is recommended that you read the following paragraphs carefully:

The advice of the article is:

If you compare the 9 types of income listed in the individual income tax law and the content displayed on the individual income tax APP, you will find that all 9 types of income are now displayed!

This means that in the future IIT reform, the "comprehensive income" may be expanded, and the "classified income" item will be reduced.

The purpose of this is to make people with high comprehensive income pay more taxes and make the tax burden more fair.

Why the expansion of "comprehensive income" can achieve this purpose, please refer to the tax rate table of "comprehensive income" in the individual income tax law, which is up to 45%.

Among the five types of income levied by category, income from interest, dividends and bonuses, income from property leasing, income from property transfer and incidental income are subject to a proportional tax rate of 20%.

The business income tax rate is higher, with a maximum of 35%:

The Ministry of Finance today released the fiscal revenue and expenditure from January to May this year, as China's fourth largest tax, the personal income tax collected a total of 607.2 billion yuan from January to May this year, a year-on-year decrease of 6%.

For the whole year of 2023, a total of 1,477.5 billion yuan of personal income tax will be collected across the country.

It can be seen that individual income tax is not only very important for regulating personal income, but also an important part of national finance.

In the context of advocating common prosperity, in the economic downturn, it is the general trend to further optimize the design of the individual income tax system, make the tax burden fairer, and let truly high-income (high-comprehensive income) families and individuals pay more taxes appropriately.

I have previously sorted out a list of the top 30 cities in per capita individual income tax in 2022, and I will also put it here for your reference, and I will update a list of 2023 later.

When I was about to press time, I saw this surprising news again, due to the recent price fluctuations and large declines, Moutai has been rejected by some pawn shops in Guangdong. And before, Moutai was simply hard currency. All we can say is that the world is changing so fast! There are no eggs under deflationary expectations.

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