According to the draft amendment to the Individual Income Tax Law reviewed by the NPC Standing Committee recently, the income tax brackets for individually-owned businesses and contracted or leased operations will be adjusted to reduce the tax burdens of these taxpayers and support their development in China.

Speaking at the 20th meeting of the 11th NPC Standing Committee, Finance Minister Xie Xuren said that the number of progressive tax brackets will be reduced from nine to seven under the amended draft of the Individual Income Tax Law. In order to strike a balance between the tax burdens of taxpayers for income from production or business operation derived by individually-owned businesses, for income from contracted or leased operations and for income from wages and salaries, the draft retains the existing five tax brackets for production and operation and makes corresponding adjustments to the tax thresholds for each bracket in the income tax table. The annual taxable income for the first threshold will be raised from Rmb5,000 to Rmb15,000. Adjustments will also be made to other brackets.

Liu Yi, professor at the School of Economics, Peking University, pointed out that lowering of tax burdens after the adjustment will encourage individually-owned businesses, contracted or leased operations and other small and medium-sized enterprises to further expand their businesses.