The seventh session of the Standing Committee of the 13th National Peoples Congress, to be held in Beijing, will hear the State Councils report on the special additional deduction of personal income tax.
Since the Interim Measures for Special Additional Deduction of Individual Income Tax (Draft for Solicitation of Opinions) (hereinafter referred to as the Draft for Solutions) ended public consultation at the beginning of last month, the Ministry of Finance and other relevant departments are improving the Measures.
Shi Zhengwen, director of the Research Center of Finance, Taxation and Law of China University of Politics and Law, told First Financial Journalist that the Standing Committee of the National Peoples Congress (NPC) listened to relevant reports and put forward specific amendments to better respond to the peoples demands because the additional deduction of individual taxes related to the vital interests of the people. In order to implement the special tax additional deduction from January 1, 2019, it needs to be withheld and prepaid monthly. Therefore, the Measures must be promulgated before the end of December, so that the special tax additional deduction can be legally enforced.
The promulgation of the above Measures requires the formal adoption of the Standing Meeting of the State Council.
Previously, the executive meeting of the State Council in September made it clear that the scope and standard of special additional deductions would be implemented on January 1, next year, after consulting the public for opinions. Therefore, fiscal and taxation experts generally expect that the Measures will be published before the end of the year.
Personal tax is one of the main tax cuts in 2019. In addition to raising the starting point of comprehensive income to 5,000 yuan and expanding the scope of low-end tax rate in excess progressive tax rate, six special additional deductions of childrens education, continuing education, interest on housing loans, housing rent, supporting the elderly and medical expenditure for serious illness are also big tricks for tax reduction.
According to the draft opinions of the Measures, the standard deduction amount for supporting the elderly is 24,000 yuan per year (2000 yuan per month). The special additional deduction standard of interest on childrens education and first home loan is 12,000 yuan per year (1,000 yuan per month). Continuing education has two different standards of 4800 yuan or 3600 yuan per year according to different categories.
The special additional deduction of housing rent is set up according to three different deduction standards according to the city category, which are 14400 yuan, 12000 yuan and 9600 yuan per year respectively. Medical expenditure for serious illness is deducted before tax according to actual expenditure, but it must be within the maximum limit of 60,000 yuan.
During the consultation period, many professionals expressed their expectations for strengthening the deduction of major illness medical expenditure, refining the special additional deduction rules such as interest on housing loans and continuing education.
Yuan Baiwei, inspector of Shanghai Municipal Finance Bureau, believes that from the draft for comments, the expression can be further clarified. For example, in the special additional deduction clause of interest on housing loans, the concept of the first housing loan should be clearer, including whether the first housing loan is mortgage or mortgage, and how to define the first housing loan in different cities.
First financial journalists have learned that in some pilot areas where special additional deduction information is filled in, the first apartment refers to the purchase of housing through commercial bank loans and provident fund loans, and the interest rate of the first apartment loan is applicable. That is to say, the use of the interest rate of the banks first apartment loan is the criterion for defining the first apartment.
Many financial and taxation experts told the First Financial Journalist that they had indeed heard of similar criteria, mainly because of the simple operation. However, at present, the Measures have not been finalized, so there may be variables.
Shi text analysis, from the declaration point of view, the individual should be the main body of the first apartment declaration, while the tax department is responsible for post-verification, and the means of verification include comparing the interest rate of the first apartment loan of commercial banks, as well as the real estate registration information of the natural resources department.
Shi Zhengwen said that, in order to improve housing conditions, individuals should replace a house. Although the interest rate of second-suite mortgage is applicable in some places, property rights are still only one suite in terms of property rights, which should also be considered as the first suite. Therefore, we can not judge whether the first house is the first one only by the interest rate of the first house loan. There are differences in the value orientation between banks and government departments in determining the interest rate of the first house loan.
Yan Yuejin, director of research at the think tank center of Yiju Research Institute, told First Financial Journalist that it is still meaningful for banks to check whether it is the first suite, because it involves bank loans, and banks naturally have the initiative to check whether such loans meet the first set of standards. The definition of the first suite is also related to the specific regulation policy of the real estate market. If the definition of the first suite is more relaxed, it will play a positive role in reducing or deducting the tax for the buyers.
According to the draft opinions of the Measures, taxpayers themselves or their spouses can use commercial banks or housing provident fund personal housing loans to purchase housing for themselves or their spouses. Interest expenditure on the first set of housing loans incurred can be deducted according to the standard of 12,000 yuan per year (1,000 yuan per month) during the repayment period. Taxpayers may not deduct interest expenditure on non-first-set housing loans.
At the same time, taxpayers can only enjoy interest deduction for the first set of housing loans. By agreement between husband and wife, one of them may choose to deduct the deduction. The specific deduction method shall not be changed within a tax year. Taxpayers shall retain housing loan contracts and loan repayment expenditure vouchers.
Cheng Lihua, Vice Minister of Finance, has previously publicly stated that around the specific opinions of the public on the scope of deduction, standards, collection and management, we will better study and improve the methods so that the broad masses of the people can effectively enjoy the dividends of reform. At the same time, according to the changes of peoples livelihood expenditure such as education, housing, medical treatment and pension, the temporary method of additional deduction for individual taxes will be dynamically adjusted in the implementation process.
Source: Zhao Yaping_NN9005, Responsible Editor of the First Finance and Economics Network