| New policy may tighten taxers' belts |
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| Thursday,September 17,2009 Posted: 18:13 BJT(13 GMT) |
| From:China Daily Article type:Reproduced |
A new tax regulation will crimp the wallets of many employees of State-run enterprises, while foreign company employees may not be affected.
Considered an open secret for many organizations based in the capital, the so-called "gray income" has been allowed for local tax evaders because the monthly stipend for such expenses as taxi fares has never been listed as person income items prior to the new nationwide rule.
The gray incomes add up to thousands of yuan per month but analysts said the new regulation on personal income tax issued this year by the State Administration of Taxation will eliminate this common practice.
The timely move will also direct more tax revenue into the nation's coffers as it slowly recovers from the recent financial recession.
The new regulation lists phone and transportation stipends as part of an employee's personal income for the first time. It also holds employees liable for tax payments once the regulation is in effect.
The original scope of personal income includes an employee's salary, annual bonus, overtime salary and some additional income sources, which are not specified.
However, employees from foreign corporations in the capital said yesterday they will not be affected.
Lene Long, an accountant who has previously worked in two Beijing-based foreign companies, gave two reasons to explain the rule's ineffectiveness.
"First, foreign ventures audit corporate spending carefully," Long said. "Second, they pay employees much more than State-run organizations, so there is no room for stipends for their employees."
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