New Individual Income Tax Law of the People’s Republic of China Ⅱ---Denise Xia Comments

 Another big change of the New Individual Income Tax Law is that the Tax Bureau is entitled to adjust the tax accordingly if following situations occured:

1. If the individual and the relative party's trade is not applied the dependent transaction principle. Which means the individual and the relative party have relationship, and they use the relationship to trade and reduce tax.

2. If a shell company which is controlled or partly controlled by the Chinese Residence, even if the shell company is ouside of China, the Tax Bureau is entitled to adjust the tax accordingly if the shell company's tax is obviously too low.

3. If the individual gain unappropriate tax interest without unreasonable purpose.

As we all know, many individuals or companies use HK or other countries' shell company to reduce or advoid tax. After the New Tax law put into practiced, it seems they need to find another way.