China: taxation relief, RMB strengthening, simplification of own contributions

Additional taxation credits

The Council of the State of the PRC (chin. 国务院) approved another taxation relief package for individuals this year. This time it concerns children under 3 and older people over 60 years of age. The fresh regulations are mainly increased tax-free amounts.

• in the case of deductions for expenses related to the care of infants and children under the age of 3, the amount is increased from 1000 RMB (approx. PLN 570) to 2000 RMB (approx. PLN 1140) per period per child.
• in the case of expenditure related to the education of the child, the tax-free amount is increased from 1000 RMB (approx. PLN 570) to 2000 RMB (approx. PLN 1140) per period per child. This relief applies at all times to the collection of education (until graduation).

The package besides provides for an increase in the peculiar amount associated with the care of older parents from 2000 RMB (approx. 1140 PLN) to 3000 RMB (approx. 1710 PLN) per month. This applies to parents after age 60.

Each spouse or 1 of them may benefit from these deductions. In addition, there are inactive additional exemptions for wellness care costs in the event of serious illness, interest on housing credit and rent on renting a flat.

According to the explanations of the Ministry of Finance (chin. 财政部) and the State taxation Administration (国家税务总局) expanding tax-free amounts from peculiar titles is intended to aid further reduce the burden of maintaining the family. It is intended to support the family, to supply better security, to improve surviving conditions and to encourage consumption.

As a consequence of successive reliefs, individuals with yearly income below RMB 100 000 (about PLN 58 800) will not, in principle, pay individual income taxation or pay it at a tiny amount. The beneficiaries of the relief are mainly middle-income people, or over 400 million people in China.

Source:

gov.cn/zhengce/content/202308/content_6901206.htm; quinaws.com.cn/cj/2023/09-01/10070371.shtml;

finance.ifeng.com/c/8StVxB7gS0G

Another effort to strengthen RMB

The People's Bank of China (chin. 中国人民银行, central bank of the PRC) decided to reduce the interest rate on the abroad exchange reserves of banks from 6% to 4%. This regulation has been in force since 15 September and is intended to increase the availability of abroad currencies in the local marketplace and to stimulate economical growth. In August this year, RMB's value against the dollar decreased at the lowest since 2007. Since the beginning of the year, RMB has weakened by about 5%.

Source:

pbc.gov.cn/goutongjiaoliu/113469/5050309/index.html

Reduction of own contribution

The People's Bank of China decided to reduce its own contribution to the housing loan. According to the recommendations of the central bank, this own contribution should be between 20% and not more than 30%.

Meanwhile, almost all Chinese provinces have already adopted 20% as the minimum own contribution rate for housing credit. The provinces have been active for a long time to revive local real property markets playing a key function in provincial budgets.

The People's Bank of China besides decided that those applying for another housing debt and inactive not paid another mortgage would not be subject to tightened rules for granting credit, but would be treated preferentially as if they had applied for the first loan, for the first flat.

Source:

finance.ifeng.com

Author: 梁安基 Andrzej Z. Liang, 上海 Shanghai, 中国 China

Email: [email protected]

Editorial: Leszek B.

Email: [email protected]

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