China's modified Personal Income Tax legislation will take effect tomorrow. The tax-free threshold for individuals will be raised from 2,000 yuan per month to 3,500 yuan per month. The threshold for foreigners living in the PRC will remain at 4,800 yuan per month, meaning that the first 4,800 yuan of a foreigner's pay packet will not be taxed.

According to today's Beijing Times, the tax burden of 4.7 million people living in the Chinese capital will be reduced and as of next month, 2.29 million Beijingers will no longer be required to pay any personal income tax.

According to the new taxation method, the minimum tax rate has been reduced to 3% from 5%. The changes will mainly affect people aged from 35 to 45 with an average income of 4,000 yuan to 5,000 yuan. These people spend a large portion of their income supporting their families and repaying loans and will see a reduction in their tax rate to 5% from 10%.

Once the new regulations come into effect tomorrow, people who make between 3,500 and 5,000 yuan per month will have their income tax burden reduced by 125 yuan a month. Those earning 5,000 or 10,000 a month will pay 280 yuan and 480 yuan less in income tax a month respectively. With the higher threshold and lower tax rate, only 7.7% of all urban workers, or around 20 million people, will pay income tax. Nationwide, approximately 60 million people will be exempt from paying income tax and annual revenue from income tax will be reduced by 160 billion yuan, according to Wang Jianfan, head of the tax department in the Ministry of Finance.

Links and Sources
Economic Observer: 個稅修法驚變?nèi)帐讉€綜改方案亮相

The Beijing Times: 新個人所得稅法9月1日實施 將惠及約470萬納稅人