China's annual individual income tax reconciliation: a simple guide
Every spring, China's taxpayers settle the previous year's income tax. Who needs to file, when, how to claim missed deductions and how to get a refund.
China taxes salaries and some other income together for the whole year as "comprehensive income". Employers withhold tax every month, but the monthly amounts are estimates. The annual reconciliation (年度汇算) settles the difference: if too much tax was withheld you get a refund, and if too little you pay the balance. This guide explains China's annual individual income tax reconciliation, who needs to file, which deductions to claim and how to file step by step.
What counts as comprehensive income
Comprehensive income includes wages and salaries, remuneration for labour services, author's remuneration and royalties. During the year, salaries are withheld on a cumulative basis, while labour service fees and royalties are withheld at set rates. Because these different methods do not always match the final tax due on your total income, the reconciliation brings everything together and applies the annual rates.
When the reconciliation happens
The reconciliation for each year takes place between 1 March and 30 June of the following year. Most people file through the official Individual Income Tax app (个人所得税), which pre-fills your income and the tax already withheld, using data reported by employers and others. Filing early in the window often means a quicker refund, although the app may ask users to book a time slot during busy periods.
Who needs to file
You must file if you owe additional tax, unless an exemption applies: generally, people whose total comprehensive income for the year was no more than CNY 120,000, or whose additional tax due is no more than CNY 400, do not have to pay the balance. You should file if you are due a refund, which is common if you changed jobs, had months without work, did not claim all your special additional deductions during the year, or had income from labour services or royalties taxed at a flat rate.
Claiming deductions you missed
The reconciliation is your chance to claim deductions you missed. These include special additional deductions for children's education, infant care, continuing education, housing loan interest or rent, elderly support and serious illness costs, as well as contributions to the personal pension scheme. Enter them in the app with the supporting details; if your employer applied them monthly, they will already appear. Our guide to China individual income tax lists the amounts for each deduction.
How to file, step by step
Open the app, choose the annual reconciliation for the relevant year and check the pre-filled income from each source. If you see income you do not recognise, you can raise an objection in the app, which helps protect you from identity misuse. Add any income that is missing and any deductions you are entitled to. The app calculates the result.
If you are due a refund, add a bank card in your name and submit; refunds are usually paid within weeks once approved. If you owe tax, you can pay in the app before the deadline. You can also choose to have your employer file on your behalf, if your employer offers that service.
Take care to report honestly. Tax authorities check claims, and incorrect deductions or omitted income can lead to back-tax and penalties.
A worked example
Suppose you worked for two employers during the year, each of which applied the CNY 5,000 monthly standard deduction for the months you worked there, but you forgot to claim the CNY 2,000 monthly deduction for your child. In the reconciliation, adding the child deduction for the full year reduces taxable income by CNY 24,000. If your top rate is 10%, that is a refund of CNY 2,400.
Estimate your tax
Our China salary tax calculator works out your full-year tax under the same rules, which helps you see whether a refund is likely. Remember that your own social insurance and housing fund contributions are deductible too; see our guide to China's five insurances.
Frequently asked questions
When is China's annual IIT reconciliation?
Between 1 March and 30 June of the following year.
Do I have to file if I owe a small amount?
Generally not if the additional tax due is no more than CNY 400, or your annual comprehensive income was no more than CNY 120,000.
How do I get a tax refund in China?
File the annual reconciliation in the Individual Income Tax app and add a bank card in your name.
Sources
This article is general information, not financial advice.