How does the General Administration of Taxation determine the accumulative withholding method for wage and salary income?

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 How does the General Administration of Taxation determine the accumulative withholding method for wage and salary income?


The newly revised Personal Income Tax Law of Beijing Newspaper News will be formally implemented on January 1, 2019. On December 20, the State Administration of Taxation issued the Announcement on the Connection of Collection and Administration of the New Individual Income Tax Law, which includes the calculation method of withholding personal income tax from withholding agents on residentspersonal wages, salaries, remuneration for services, contributions, royalties, and the withholding of personal income tax in advance from non-residents personal income tax. The calculation method is clear.

ResidentsWages and Salary Income

Calculating withholding tax by cumulative withholding method

The announcement stipulates that the withholding agent shall calculate the withholding tax according to the accumulative withholding method when paying the income of wages and salaries to the individual residents, and make the declaration of full withholding monthly.

The so-called cumulative withholding method refers to a method of determining the amount of tax payable in the current period by subtracting the corresponding deduction from the cumulative income of each month, calculating the cumulative amount of tax payable against the comprehensive income tax rate table, and subtracting the amount of tax paid.

How to understand it in a popular way? Shi Zhengwen, director of the Research Center of Finance and Taxation Law of China University of Political Science and Law, told Xinjing News, Because we have to pay tax on the combined income annually, we need to use the method of accumulative withholding. For example, if we want to calculate the pre-withholding tax in May, we should first calculate the total amount of pre-withholding tax payable in January-May, then multiply the pre-withholding rate, subtract the amount after quick calculation deduction, then subtract the cumulative tax deduction and exemption, and the amount of pre-withholding tax in January-April, then we can get the pre-withholding tax in May in one month.

On the one hand, for most taxpayers who have only one salary and salary income, the tax withheld and paid in advance at the end of the tax year is basically equal to the annual tax payable, so they do not need to go through self-tax declaration, remittance and settlement; on the other hand, for taxpayers who need to make up and refund, the difference between the tax withheld in advance and the annual tax payable is relatively small and will not occupy the tax. Too many people and too much money.

Zhang Bin, assistant dean of the Institute of Finance and Economics Strategies and director of the Tax Research Department of the Academy of Social Sciences, told the Beijing News that the cumulative withholding method is good for everyone. When paying taxes monthly, assume that a workers income in the first month is 3000 yuan, not paying taxes, and the income in the second month is 250,000 yuan. The total amount of tax exemption is 8000 yuan, but if he pays taxes accumulatively, the amount of withholding is 8000 yuan Then the two-month tax exemption will be 10,000 yuan.

Remuneration for services, contributions, etc.

Basic translation of current tax law withholding methods

According to the announcement, the withholding and prepayment methods of personal income tax from personal service remuneration, manuscript remuneration and royalty have basically shifted the withholding methods of the current tax law. In particular, it shifted the stipulation that each income should not exceed 4,000 yuan and expenses should be calculated at 800 yuan.

According to the General Administration of Taxation, this method of withholding and pre-payment is not only easy for withholding agents and taxpayers to understand, but also easy for them to operate.

In addition, according to the provisions of the new Personal Income Tax Law, individuals who have no residence or residence in China or who have resided in China for less than 183 days in a tax year are non-resident individuals. Individual income tax shall be paid in accordance with the provisions of this Law on income obtained by non-resident individuals within the territory of China. The Announcement clearly states that when the withholding agent pays wages and salary income to non-resident individuals, income from remuneration for services, income from contributions and royalties, the individual income tax shall be withheld and withheld on a monthly or successive basis.

The Great Wall Securities Research and Development Daily commented on the personal income tax reform, saying that the most important significance of the personal tax reform in 2018 is to take the first step toward the syndrome collection. In view of the problems existing in the previous tax system, the reformed tax system is more conducive to adjusting income distribution, and reflects individual differences. The increase of tax exemption and annual average help to reduce tax, but the adjustment of tax rate gradation brings more benefits to the high-income class than the increase of tax exemption. Incorporation of labor remuneration into the syndrome income leaves a huge space for tax planning.

The report of Hengda Research Institute also points out that the impact of the tax reform includes more benefits to middle and low-income groups, the establishment of a modern tax system, the promotion of national governance, the stimulation of taxpayersawareness and the supervision of government revenue and expenditure behavior.

Source: Xu Meng-NN7485, Responsible Editor of Beijing Newspaper