China: Tax perk pilot scheme to start in one city in each province
Source: Asia Insurance Review | Jun 2015
The Chinese government’s pilot plan to grant a tax break to individuals to encourage them to buy private health insurance will commence in the country’s four municipalities – Beijing, Shanghai, Tianjin, Chongqing – and in one big city in every province/region.
The CIRC, the Ministry of Finance, and the State Administration of Taxation, have issued a notice jointly saying that each province/region (their number totals 27) is to select a city for the trial. The city which is chosen needs to have a large population and “high management capabilities”.
The finance, taxation and insurance supervision bureaux of each province/region should formulate how the pilot programme is to be implemented in the chosen city. They have to report on their preparatory work to the provincial governments. They also have to submit a report to the central governing agencies, that is, CIRC, the Finance Ministry and the State Administration of Taxation, by 30 June.
Under the tax break proposal, individuals will enjoy annual income tax deductions of up to a maximum of CNY2,400 (US$387) a year or CNY200 a month for premium payments made towards private health insurance. A person who earns CNY5,000 a month will save CNY72 in taxes each year.
The decision to grant the tax perk was made at a State Council executive meeting on 6 May. The goal is to promote commercial health insurance so that it would supplement a government-run basic health insurance scheme.