Individual Tax Settlement March-June 2022

Individual taxpayers who were tax residents in China in 2021 may be required to handle the Individual income tax (“IIT”) annual settlement for the year 2021 from 1 March 2022 to 30 June 2022.


On 8 February, the State Administration of Taxation issued for this purpose the Announcement on Handling the Final Settlement and Payment of Individual Income Tax on Comprehensive Income in 2021 (SAT Announcement [2022] n. 1), which provides a guideline for taxpayers who are required to handle the annual settlement.


The taxpayers shall determine their taxable income and the amount of IIT payable for the year 2021 according to the following steps:

  1. To sum four income categories (wages and salaries, income from personal services, author’s remuneration, and royalties) obtained from 1 January 2021 to 31 December 2021 into the comprehensive income. Other kinds of income such as business income, property lease income, income from transfer of property, occasional income, interest, and dividends are not included in the computation.

  2. To deduct from the amount computed at point 1 the standard deduction (RMB 60,000), the special deductions (social insurance contributions), the special additional deductions, and other available deductions determined in accordance with laws and regulations (such as qualified donations).

  3. To determine the amount of annual IIT payable by applying the tax rate and the quick deductions according to the table below.

In case the taxpayer underpaid the IIT during the year (which means that the annual IIT payable calculated at point 3 is higher than the tax prepaid during the year), he/she will be required to perform a make-up payment of the tax; in case of overpayment, the taxpayer will be entitled to apply for a tax refund.


If a taxpayer prepaid the IIT during the tax year and meets any of the following circumstances, he/she is not required to apply for the annual settlement:

  • The comprehensive income does not exceed RMB 120,000 in the tax year;

  • The make-up payment does not exceed RMB 400;

  • The tax prepaid during the year is consistent with the final annual tax payable amount; and

  • Those who do not apply for a tax refund even if meeting the conditions;

On the contrary, taxpayers falling in one of the following two circumstances are required to handle the annual IIT settlement:

  • The IIT prepaid during the year is higher than the annual IIT payable, and the taxpayer intends to obtain a tax refund; and

  • The taxpayer’s comprehensive income is over RMB 120,000 in the tax year, and make-up payment exceeds RMB 400.

The annual settlement of the individual income tax shall be performed between 1 March 2022 to 30 June 2022. Taxpayers who were China tax residents in 2021 who will depart from China before 1 March shall handle the annual settlement before leaving the country.


The annual settlement can be handled directly by the taxpayer. Alternatively, the taxpayer can entrust the employer that acted as withholding agent (in such case, the taxpayer shall confirm with the entity in writing or electronically before 30 April 2022 and provide supplementary information for which he/she is responsible for the authenticity, accuracy and completeness), or appoint a tax professional by signing a power of attorney.


The annual settlement can be handled through online channels (including an app for mobile phones); it can also be done by mail or physically at the tax office.


After the annual settlement, the taxpayers shall keep all the materials and supporting documentation for five years.


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