CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON THE ISSUE CONCERNING POLICY LINKS RELATED TO THE CALCULATION AND PAYMENT OF THE INDIVIDUAL INCOME TAX OF THE INCOME FROM WAGES AND SALARIES

The State Administration of Taxation

Circular of the State Administration of Taxation on the Issue concerning Policy Links Related to the Calculation and Payment of the
Individual Income Tax of the Income from Wages and Salaries

Guo Shui Fa [2005] No. 196

Bureaus of State Taxes and Bureaus of Local Taxes in all provinces, autonomous regions, municipalities under direct control of the
Central Government, and cities specially designated in the state plan:

In accordance with the Decision on the Amendment of the Individual Income Tax Law of the People’s Republic of China adopted at the
18th Plenary Session of the Standing Committee of the 10th National People’s Congress, the deduction rate for the income from wages
and salaries shall be raised to 1600 Yuan per month against the previous rate of 800 Yuan per month as the date of January 1, 2006.
After studies, the issue concerning policy links related to the calculation and payment of individual income tax of the income from
wages and salaries is hereby specified as follows:

I.

The taxpayer’s income from wages and salaries actually acquired before December 31, 2005 (included), no matter whether it will be
collected after January 1, 2006, shall, when calculated for the payment of the individual income tax, be deducted at the rate (800
Yuan per month) prescribed in the former Individual Income Tax Law.

II.

The taxpayer’s income from wages and salaries actually acquired as of the date of January 1, 2006 shall, when calculated for the payment
of the individual income tax, be deducted at the rate (1600 Yuan per month) prescribed in the new Individual Income Tax Law.

The State Administration of Taxation

December 9, 2005