How to determine when the tax is due?

The period of tax payment determines the period of the enterprise's withholding declaration, and may even affect the choice of tax calculation method. In the tax law, the period of personal income tax needs to be judged according to the "cash basis of collection and payment", that is, the time when the withholding unit pays the annual one-time bonus is the period of tax. The withholding unit is required to declare the withholding of the employee's personal income tax in the month following the payment of the annual one-time bonus.

For example, if Company A pays the annual one-time bonus of 2020 in December 2020, the tax period of the annual one-time bonus of the employee is December 2020, and Company A shall withhold and declare the individual income tax of the annual one-time bonus of the employee in January 2021. If Company A pays the annual one-time bonus of 2020 to employees in February 2021, the tax period shall be February 2021, and Company A shall withhold and declare the individual income tax of the annual one-time bonus of employees in March 2021.

Is it incorporated into comprehensive income for personal income tax calculation?

According to Article 1 of the Notice of the General Administration of Taxation of the Ministry of Finance on the connection of Preferential Policies after the Amendment of the Individual Income Tax Law (Finance and Taxation [2018] No. 164, hereinafter referred to as "Document No. 164"), the annual one-time bonus obtained by an individual resident shall not be incorporated into the comprehensive income of the year before December 31, 2021. The annual one-time bonus income is divided by the amount obtained in 12 months, and the applicable tax rate and quick deduction are determined according to the consolidated income tax rate table after conversion on a monthly basis, and tax is calculated separately. Document 164 also makes it clear that residents can also choose to incorporate the annual one-time bonus into the comprehensive income of the year to calculate tax. In practice, this option can be chosen by the taxpayer in the process of annual personal income tax settlement and settlement, in accordance with the method that is beneficial to the individual.

In other words, there are currently two ways to tax annual one-time bonuses: they can be incorporated into consolidated income or they can not be incorporated into consolidated income. However, in a tax year (the year in which the tax is paid), each taxpayer has only one opportunity to choose whether to incorporate the annual lump sum bonus into the consolidated income for tax calculation.

中文原文 Chinese version

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