Administrative Measures for the Annual Reconciliation and Settlement of Individual Income Tax on Comprehensive Income

According to the Individual Income Tax Law of the People's Republic of China, the Tax Administration Law of the People's Republic of China, and relevant state regulations, the State Taxation Administration drafted the Measures for the Administration of the Annual Comprehensive Income Settlement and Payment of Individual Income Tax (hereinafter referred to as the Measures), which was officially open for public comment from January 3 to February 2, 2025. After careful study and incorporation of relevant opinions and suggestions, it was reviewed and approved at the first executive meeting of the State Taxation Administration on February 21, 2025, and takes effect from the date of publication.

I. Main background for issuing the Measures

Starting in 2019, China began implementing a new individual income tax system combining comprehensive and classified taxation. After the end of each year, taxpayers need to combine and calculate the four categories of comprehensive income obtained in the previous year—wages and salaries, labor remuneration, author's remuneration, and royalties—and handle annual reconciliation with tax authorities to settle refundable or payable taxes. From 2019 to 2023, tax authorities issued announcements each year on handling the annual reconciliation of individual income tax comprehensive income, clarifying matters such as the content of annual reconciliation, applicable circumstances, handling time, handling methods, handling channels, and filing information. With the common support and active participation of all sectors of society, the five annual reconciliations were generally stable, and conditions are now in place to issue a more stable and mature management measure for comprehensive income annual reconciliation.

The Decision of the Third Plenary Session of the 20th Central Committee of the Communist Party of China proposed to "improve the individual income tax system that combines comprehensive and classified taxation," which set higher requirements for standardizing the service and management of the annual reconciliation of comprehensive individual income. To further implement the arrangements of the Third Plenary Session, better stabilize social expectations, and promote the regular conduct of annual reconciliation, the State Taxation Administration, taking the content of the previous five annual reconciliation announcements as the main body, and on the basis of a comprehensive review and systematic summary of previous annual reconciliations, fully absorbed the opinions and suggestions raised by taxpayers and all sectors of society, and drafted and issued the Measures.

II. Main contents of the Measures

The Measures generally continue the main contents of the announcements on handling the annual reconciliation of comprehensive individual income tax over the years, and consist of six chapters and thirty-seven articles. The main contents include:Chapter One General Provisions, Mainly clarifies the scope of annual reconciliation, the concept of annual reconciliation, the tax year, the annual reconciliation deadline, and circumstances of annual reconciliation.Chapter 2 Annual settlement preparation and filing of related matters, Mainly clarifies the preparatory work taxpayers need to carry out before annual reconciliation, the deductions, tax reductions and exemptions and related requirements that can be filled in or supplemented during annual reconciliation, and the objection appeal process.Chapter 3 Annual Settlement and Payment Handling and Services, Mainly clarifies the methods, channels, document retention, corrected filing, competent tax authorities, and deferred filing for annual reconciliation, as well as tax authorities' pre-filling services for return items, appointment services, and policy interpretation and operational guidance services for taxpayers.Chapter 4 Tax Refund (Supplementary Payment), Mainly clarifies the conditions for annual reconciliation tax refunds, refund review, account requirements, and tax payment channels. For eligible taxpayers, tax authorities provide priority refund services and simplified filing refund services.Chapter 5 Management Measures and Legal Liability, Mainly clarifies the responsibilities of all parties in annual reconciliation, labeling of individual income tax payment records, tax credit management, information confidentiality, orders to correct within a time limit, handling and penalties, and emphasizes taxpayers' right to enjoy tax legal remedies in accordance with the law.Chapter 6 Supplementary Provisions, Mainly clarifies the effective date of the Measures and the two types of situations where the Measures do not apply.

III. Main features of the Measures

The Measures place greater emphasis on stabilizing social expectations. Drawing on service and management practices in recent years, they institutionalize measures with obvious implementation effects and favorable taxpayer experiences, further improving the annual reconciliation service and management system. For example, measures such as tax authorities providing pre-filling services for tax return items, appointment-based handling services in the early stage of the annual reconciliation, and priority tax refund services for taxpayers who meet the annual reconciliation tax refund conditions and bear a relatively heavy living burden are written into the Measures to facilitate taxpayers' quick handling of the annual reconciliation; another example is that the Measures provide a channel for objections and complaints where some taxpayers have questions about their own income and tax situation during the annual reconciliation or where their identity has been fraudulently used.

The Measures place greater emphasis on protecting the lawful rights and interests of taxpayers, more clearly define the rights and obligations of all parties in the annual reconciliation, and provide better legal protection for annual reconciliation service and management. For example, the Measures require tax authorities and their staff to keep individuals' tax-related information confidential in accordance with the law, and list the legal remedy channels available when taxpayers' lawful rights and interests are infringed.

The Measures also place greater emphasis on facilitating taxpayers' detailed understanding of various annual reconciliation matters and guiding taxpayers to make preparations for the annual reconciliation. For example, before the annual reconciliation begins, taxpayers can promptly confirm the validity of basic information such as contact phone numbers and bank accounts filed in the Individual Income Tax APP; check and confirm the accuracy of information such as comprehensive income, relevant deductions and tax paid through the Individual Income Tax APP or the withholding agent; and at the same time sort out the relevant evidentiary materials to be filed during the annual reconciliation. Taking the 2024 annual reconciliation of comprehensive individual income tax as an example, this annual reconciliation began on March 1, 2025. The system also opened the appointment function on February 21. Taxpayers who need to handle the annual reconciliation between March 1 and March 20 can make an appointment through the Individual Income Tax APP.

IV. Issues requiring explanation

(1) Circumstances under which annual reconciliation filing is not required

Article 6 of the Measures provides four circumstances in which taxpayers who have obtained comprehensive income and have prepaid individual income tax in accordance with the law are not required to handle the annual reconciliation. Among them, "(1) additional tax is required upon annual reconciliation but the annual comprehensive income does not exceed the prescribed amount; (2) additional tax is required upon annual reconciliation but does not exceed the prescribed amount" mainly refers to the provision in the Announcement of the Ministry of Finance and the State Taxation Administration on Continuing to Implement Policies Concerning the Annual Reconciliation of Comprehensive Individual Income Tax (No. 32 of 2023) that "before December 31, 2027, where the annual comprehensive income obtained by a taxpayer does not exceed 120,000 yuan and additional tax is required upon annual reconciliation, or where the additional tax upon annual reconciliation does not exceed 400 yuan, the taxpayer may be exempted from handling the annual reconciliation of comprehensive individual income tax."

(2) About Priority Tax Refund Services

Article 23, Paragraph 2 of the Measures provides that "for taxpayers who meet the annual reconciliation tax refund conditions and bear a relatively heavy living burden, the tax authority shall provide priority tax refund services." This mainly means that for groups such as those "supporting both elderly and young," those with a relatively heavy medical burden, those with a relatively large income decline, and those eligible for simplified filing and tax refund, tax authorities will continue to implement the priority tax refund system to provide taxpayers with more convenient tax refund services.

(3) Reminders on Review of Annual Settlement and Payment Tax Refunds

Article 24, Paragraph 2 of the Measures provides that "where the tax authority, upon review, finds that a tax refund application does not conform to the provisions, it shall notify the taxpayer to supplement materials or correct the annual reconciliation filing; if the taxpayer refuses to provide materials or refuses to correct the filing, the tax authority shall not grant the tax refund." When conducting tax refund review, if the tax authority finds that a taxpayer's tax refund application does not conform to the provisions, it will remind the taxpayer through the Individual Income Tax APP and website messages, mobile phone text messages, telephone calls and other means. After receiving such messages, the taxpayer shall promptly supplement materials or correct the annual reconciliation filing to avoid affecting their own tax credit.

(4) Service of Documents Ordering Correction Within a Time Limit

Article 33 of the Measures provides that "after the annual reconciliation period ends, for taxpayers who fail to file and pay additional tax or fail to pay additional tax in full, the tax authority shall order them to make corrections within a time limit in accordance with the law and serve the relevant documents." For those who have signed the Confirmation of Electronic Service of Tax Documents, the tax authority shall serve electronic documents through the Individual Income Tax APP, website and other channels; for those who have not signed the Confirmation of Electronic Service of Tax Documents, service shall be made by other means. Electronic service has the same legal effect as other service methods.

After the Measures are issued, tax authorities will earnestly strengthen tax filing guidance for the annual reconciliation, improve taxpayer services, continuously optimize the functions of the Individual Income Tax APP, promptly respond to and resolve taxpayers' reasonable demands, and continue to provide taxpayers with a better filing experience as always.

State Taxation Administration Order

No. 57

The "Measures for the Administration of the Annual Comprehensive Income Settlement and Payment of Individual Income Tax" were reviewed and approved at the 1st bureau affairs meeting of the State Taxation Administration for 2025 on February 21, 2025, and are hereby promulgated, taking effect from the date of publication.

Director of the State Taxation Administration: Hu Jinglin

February 26, 2025

 

Administrative Measures for the Annual Reconciliation and Settlement of Individual Income Tax on Comprehensive Income

Chapter One General provisions

 

Article 1 To protect the legitimate rights and interests of taxpayers and standardize the annual settlement of comprehensive individual income tax, in accordance with "Individual Income Tax Law of the People's Republic of China" and its implementing regulations (hereinafter collectively referred to as the Individual Income Tax Law) and "Tax Collection and Administration Law of the People's Republic of China" and its implementing rules (hereinafter collectively referred to as the Tax Administration Law) and other relevant provisions, these Measures are formulated.

Article 2If a taxpayer obtains comprehensive income, individual income tax shall be calculated on a consolidated basis by tax year, and the annual final settlement shall be handled according to law.

Article 3Comprehensive income referred to in these Measures means the wages and salaries income, labor remuneration income, author's remuneration income, and royalties income obtained by taxpayers.

The annual settlement and payment referred to in these Measures means the act of a taxpayer aggregating the comprehensive income amount obtained within a tax year, deducting expenses of RMB 60,000 as well as special deductions, special additional deductions, other deductions determined according to law, and qualified public welfare and charitable donations, applying the comprehensive income individual income tax rate and subtracting the quick calculation deduction, subtracting the tax reduction and exemption amount to calculate the actual tax payable for the year, then subtracting the prepaid tax amount to determine the tax refundable or payable for that tax year, and filing a tax return with the tax authority and settling the tax within the statutory time limit. The specific calculation formula is as follows:

Tax refundable or payable = [(Comprehensive income amount - 60,000 yuan - special deductions such as "three insurances and one housing fund" - special additional deductions such as children's education - other deductions determined according to law - qualified public welfare and charity donations) × applicable tax rate - quick deduction] - tax reduction and exemption amount - tax already prepaid

If a taxpayer obtains overseas income, it shall truthfully file according to relevant provisions.

Article 4A taxpayer determines the tax year to which comprehensive income belongs based on the time the comprehensive income is actually obtained.

If the overseas tax year for overseas income obtained is inconsistent with the Gregorian calendar year, the Gregorian calendar year in which the last day of the overseas tax year falls shall be the corresponding China tax year for the overseas income.

Article 5A taxpayer shall process the annual reconciliation within March 1 to June 30 of the year following the tax year in which the comprehensive income is obtained. A taxpayer without a domicile within China who leaves the country before the annual reconciliation begins may process it before leaving.

Article 6If a taxpayer has prepaid individual income tax according to law when obtaining comprehensive income and meets any of the following circumstances, there is no need to handle the annual final settlement:

(1) Where supplementary tax is required upon annual settlement but the annual comprehensive income does not exceed the prescribed amount;

(II) Those requiring supplementary tax payment upon annual settlement but not exceeding the prescribed amount;

(3) Where the prepaid tax amount is consistent with the actual tax payable in the annual reconciliation;

(4) Those who meet the conditions for annual settlement tax refunds but do not apply for a tax refund.

Article 7If a taxpayer obtains comprehensive income and meets any of the following circumstances, it needs to handle the annual final settlement according to law:

(1) Where the prepaid tax amount exceeds the actual tax payable in the annual reconciliation and a refund is applied for;

(II) The prepaid tax amount is less than the actual tax payable in the annual reconciliation and does not fall under the circumstances specified in Article 6 of these Measures;

(3) Underreporting or failure to report comprehensive income in a tax year due to incorrect applicable income category, failure of the withholding agent to perform withholding obligations in accordance with the law, or obtaining comprehensive income without a withholding agent.

 

Chapter 2 Annual settlement preparation and filing of related matters

 

Article 8Before the annual reconciliation, a taxpayer shall confirm the validity of the basic information filled in, such as contact telephone number and bank account, and check and confirm information such as comprehensive income, relevant deductions, and tax already paid through the Individual Income Tax APP (hereinafter referred to as the IIT APP), the Natural Person Electronic Tax Bureau website (hereinafter referred to as the website), or the withholding agent.

Article 9Taxpayers may file or supplement the following deductions during the annual final settlement:

(1) A deduction of 60,000 yuan;

(II) Special deductions for eligible basic pension insurance, basic medical insurance, unemployment insurance and other social insurance premiums and housing provident fund, etc.;

(3) Special additional deductions that meet the conditions for care of infants and young children under 3 years old, children's education, continuing education, major illness medical treatment, housing loan interest or housing rent, and support of the elderly;

(4) Other deductions that meet the conditions, such as enterprise annuities and occupational annuities, commercial health insurance, and private pensions;

(5) Donations to qualified public welfare and charitable causes.

Where a taxpayer fills in the deductions in Items 2 to 5 of this Article, it shall retain or provide relevant evidentiary materials as required.

Article 10Taxpayers who simultaneously obtain comprehensive income and business income may declare the deduction of 60,000 yuan, special deductions, special additional deductions, and other deductions determined according to law under either comprehensive income or business income, but may not declare the same deductions repeatedly.

Article 11The special additional deductions filled in by a taxpayer shall comply with the Individual Income Tax Law and relevant national regulations.

If a taxpayer jointly claims special additional deductions such as care for infants under 3 years old, children's education, major medical expenses, housing loan interest or housing rent, and support for the elderly with other filers, the deduction amount shall be confirmed with the other filers within the allowed deduction standard.

Article 12If a taxpayer enjoys tax incentives such as relevant tax reductions or exemptions, it shall carefully understand the policy provisions before filing and confirm that it meets the conditions.

Article 13Where a taxpayer has objections to information such as comprehensive income declared by the withholding agent, it shall first verify and confirm with the withholding agent. If there is indeed an error and the withholding agent refuses to correct it, or if the taxpayer cannot contact the withholding agent due to identity theft or other circumstances, the taxpayer may initiate an appeal to the tax authority through the IIT APP, the website, etc.

 

Chapter 3 Annual Settlement and Payment Handling and Services

 

Article 14Taxpayers may choose the following methods to handle the annual final settlement:

(1) Handle it yourself;

(II) Handle on behalf of the taxpayer through the employing entity (including entities that withhold and prepay individual income tax on labor remuneration income under the cumulative withholding method, hereinafter collectively referred to as the entity); if the taxpayer requests, the entity shall handle on their behalf or train and guide the taxpayer to complete the filing and tax refund (supplementary payment); where handled on behalf of the taxpayer by the entity, the taxpayer shall confirm with the entity in writing or electronically; if the taxpayer has not confirmed with the entity, the entity shall not handle on their behalf;

(3) Entrust a tax-related professional service institution or other entity or individual to handle it. For entrusted handling, the taxpayer shall sign an authorization letter with the entrusted party.

Article 15Taxpayers shall preferentially handle the annual final settlement through the individual income tax APP or website, and may also handle it by mail or at a tax service hall. If choosing to handle by mail, the taxpayer shall send the tax return to the address announced by the tax bureau of the province, autonomous region, municipality directly under the Central Government, or city under separate state planning where the competent tax authority is located.

Article 16When handling the annual final settlement, taxpayers shall ensure that the filed information is true, accurate, and complete.

Where handled by the employer on behalf of the taxpayer or entrusted to a trustee, the taxpayer shall truthfully provide the employer or trustee with information such as all comprehensive income, relevant deductions, and tax preferences enjoyed for the tax year.

Taxpayers and units handling the annual comprehensive income reconciliation on their behalf must retain all information and materials on comprehensive income, related deductions, and tax preferences enjoyed for 5 years from the end date of the reconciliation period.

Article 17After an entity or entrusted party handling the annual reconciliation on behalf of the taxpayer completes the annual reconciliation, it shall promptly notify the taxpayer of the handling status. If the taxpayer discovers an error in the annual reconciliation, it may request the entity or entrusted party to correct the filing, or may correct the filing itself.

Article 18If the taxpayer handles it personally or entrusts a trustee to handle it during the annual final settlement period, the filing shall be made to the competent tax authority of the unit where the taxpayer is employed. If there are two or more employing units, the taxpayer may independently choose to file with the competent tax authority of one of them. If the unit handles the annual final settlement on behalf of the taxpayer, the filing shall be made to the unit's competent tax authority.

Where a taxpayer has no employing unit, the taxpayer shall file with the competent tax authority of the place of its main source of income, the place of its household registration, or its habitual residence. The place of main source of income refers to the location of the withholding agent that cumulatively paid the taxpayer the largest amount of remuneration for labor services, author's remuneration, and royalties during the tax year.

After the annual final settlement and payment period ends, tax authorities determine the competent tax authority for taxpayers who have not yet handled annual final settlement and payment.

Unless otherwise specially provided, once the competent tax authority for the annual final settlement of a taxpayer's tax year is determined, it shall not be changed.

Article 19Tax authorities rely on the individual income tax APP and website to provide pre-filling services for filing form items, helping taxpayers handle annual final settlement conveniently.

Tax authorities carry out policy interpretation and operational guidance for annual tax reconciliation, providing tax-related consultation through channels such as the individual income tax APP, websites, and 12366.

Special groups who have difficulty independently completing the annual tax settlement and payment may submit applications, and tax authorities can provide them with personalized convenience servicesservices.

Article 20Tax authorities provide appointment services in the early stage of annual final settlement, and taxpayers with handling needs can make appointments through the individual income tax APP.

Tax authorities and units guide and remind taxpayers in batches and stages to handle annual final settlement within a determined time period.

Article 21If a taxpayer cannot complete the annual final settlement within the deadline and needs an extension, it shall submit an extension application to the tax authority before the end of the final settlement period. After approval by the tax authority, the settlement may be postponed; however, during the final settlement period, the taxpayer shall prepay tax based on the amount actually paid in the previous final settlement period or the amount assessed by the tax authority, and complete the final settlement within the approved extension period.

 

Chapter 4 Tax Refund (Supplementary Payment)

 

Article 22If a taxpayer handles the annual final settlement according to law and the actual tax payable is less than the prepaid tax amount, it may apply for a final settlement tax refund.

Where a taxpayer makes a supplementary tax payment upon annual reconciliation, the tax shall be paid before the end of the annual reconciliation period.

Article 23Taxpayers whose comprehensive income does not exceed 60,000 yuan and who have already prepaid individual income tax may, during the annual reconciliation and settlement period, choose the simplified filing method through the individual income tax APP or website to handle the annual reconciliation and settlement tax refund.

For taxpayers who meet the conditions for annual settlement refund and have a relatively heavy living burden, tax authorities provide priority refund services.

Article 24After a taxpayer submits an annual reconciliation tax refund application, the tax authority conducts a tax refund review in accordance with law.

If tax authorities find upon review that a tax refund application does not comply with regulations, they shall notify the taxpayer to supplement materials or correct the annual tax reconciliation filing. If the taxpayer refuses to provide materials or correct the filing, the tax authorities shall not grant the tax refund.

Article 25Taxpayers applying for annual settlement tax refunds and other refunds must, under the following circumstances, apply for a refund after handling prior-year annual settlement tax supplements, correcting declarations, or providing materials:

(1) Failing to lawfully complete the settlement and payment of supplementary tax for previous years;

(II) Those notified by tax authorities that there are doubts in the annual settlement of previous years and that have not corrected the filing or provided materials.

Article 26A taxpayer applying for an annual reconciliation tax refund shall provide a compliant bank account opened within China. The tax authority shall process the tax refund after review in accordance with regulations.

Where a taxpayer fails to provide its own valid bank account or provides incorrect account information, it shall apply for the tax refund after correction in accordance with regulations.

Article 27If a taxpayer handles tax payment for the annual final settlement, it may pay tax through online banking, tax service halls, bank counters, non-bank payment institutions, and other channels.

For those choosing the mail method to handle supplementary tax payment for the annual comprehensive income settlement, taxpayers should confirm the settlement progress through the individual income tax APP, website, or the competent tax authority and pay the tax in a timely manner.

 

Chapter 5 Management Measures and Legal Liability

 

Article 28After the annual final settlement and payment period ends, for taxpayers who fail to declare and pay additional tax or fail to pay additional tax in full, tax authorities shall, in accordance with the lawRecover the unpaid amountorUnderpaid tax,A late payment surcharge shall be imposed and noted in the individual income tax filing record. After the taxpayer corrects the failure to file or pay supplementary tax, the tax authority shall promptly remove the notation.

Article 29Where a taxpayer's annual reconciliation results in an excess refund or underpayment of tax due to incorrectly filled filing information, and the taxpayer voluntarily corrects it or promptly corrects it after being reminded by the tax authority, the tax authority may exempt the taxpayer from penalty under the "no penalty for first violation" principle.

Article 30Where a taxpayer fails to file tax returns as required, fails to pay or underpays tax, files false tax returns, fails to cooperate with tax inspections, makes false commitments, or commits other such acts, it will be included in the credit information system; if it constitutes serious dishonesty, dishonest credit constraints will be imposed in accordance with relevant regulations.

Article 31Where an entity fails to handle the annual comprehensive income reconciliation on behalf of a taxpayer as required, or impersonates a taxpayer's identity to handle withholding declaration or annual comprehensive income reconciliation, it shall be handled in accordance with relevant provisions and included in the enterprise tax credit evaluation.

If the enterprise legal representative, natural person partner of a partnership, investor of a sole proprietorship enterprise, etc. fails to complete annual comprehensive income reconciliation in accordance with the law, they will be linked into the enterprise tax credit evaluation.

Article 32If a trustee assists a taxpayer in false filing, fraudulently obtaining tax refunds, or committing other tax violations related to the annual reconciliation, it shall be handled in accordance with the Tax Administration Law and regulations on the management of tax-related professional services, and included in the credit evaluation management of tax-related professional services.

Article 33After the annual final settlement and payment period ends, for taxpayers who fail to declare and pay additional tax or fail to pay additional tax in full, tax authorities shall order them to correct within a time limit in accordance with the law and serve relevant documents; if they still fail to correct after the deadline, tax authorities may, in accordance with the Tax Administration LawHandling penalties. In serious cases, public exposure.

Article 34 Tax authorities, agency handling units, and trustees shall keep taxpayers' tax-related information confidential in accordance with the law.

Article 35If tax authorities and their staff violate laws, regulations, and other provisions and infringe upon the lawful rights and interests of taxpayers, taxpayers may file complaints, reports, or apply for administrative reconsideration or initiate administrative litigation in accordance with the law.

 

Chapter 6 Supplementary Provisions

 

Article 36This Measures do not apply to classified income such as property rental obtained by taxpayers, and income that is not included in comprehensive income for tax calculation according to provisions.

This Measures do not apply to non-resident individuals who obtain income from wages and salaries, remuneration for labor services, author's remuneration, or royalties.

Article 37These Measures take effect from the date of publication。