If the total amount of economic compensation or compensation does not exceed 3 times the average annual salary of employees in the previous year in the city where the unit is located, personal income tax is not required. If the total amount of economic compensation or compensation exceeds three times the average annual salary of employees in the previous year in the city where the unit is located, the excess shall be subject to personal income tax.

"Notice on the Exemption of Personal Income Tax on One-time Compensation Income Obtained from the Termination of the Labor Relationship between Individuals and Employers"

Ministry of Finance and State Administration of Taxation

About Notice on the Exemption from Personal Income Tax on One-time Compensation Income Obtained from the Termination of the Labor Relationship between Individuals and Employers

Finance and Taxation [2001] No. 57 Finance departments (bureaus) and local taxation offices of provinces, autonomous regions, municipalities directly under the Central Government, and cities under separate state planning Bureau, Finance Bureau of Xinjiang Production and Construction Corps:

In order to further support enterprises, institutions, agencies, social groups and other employers in promoting the reform of labor and personnel systems, properly placing personnel, and maintaining social stability, we are now providing The relevant issues regarding the exemption of personal income tax on the one-time compensation income obtained by terminating the labor relationship with the employer are notified as follows:

1. The one-time compensation income obtained by the individual due to the termination of the labor relationship with the employer (including the employer Economic compensation, living allowances and other subsidies issued by the unit)

The part of the income that is within three times the local average salary of employees in the previous year is exempt from personal income tax; the excess part is subject to the national According to the relevant provisions of the Notice of the State Administration of Taxation on the Collection of Personal Income Tax on Economic Compensation for Individuals Due to the Termination of Labor Contracts (Guo Shui Fa [1999] No. 178), personal income tax is calculated and levied.

2. When individuals receive one-time compensation income, the housing provident fund, medical insurance premiums, basic pension insurance premiums, and unemployment insurance premiums actually paid in accordance with the proportions stipulated by the national and local governments can be included in the calculation of their one-time compensation. The compensation income shall be deducted from personal income tax.

3. If an enterprise declares bankruptcy in accordance with relevant national laws, personal income tax will be levied on the one-time resettlement fee income received by the employees from the bankrupt enterprise. This notice shall be effective from October 1, 2001. If the previous regulations are inconsistent with the provisions of this notice, the provisions of this notice will be implemented. The provisions of this notice will also apply to one-time compensation income that has occurred before but has not yet been taxed.

September 10, 2002

State Administration of Taxation

Notice on the collection of personal income tax on economic compensation received by individuals due to termination of labor contracts

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Guo Shui Fa [1999] No. 178

Some regions have recently requested instructions, requiring a one-time payment to laid-off employees when the enterprise terminates the labor contract of employees during the process of reorganization, restructuring or downsizing to increase efficiency. The issue of personal income tax policy on sexual economic compensation shall be clarified. After research, the regulations are as follows:

1. For individuals who obtain one-time economic compensation income due to the termination of their labor contracts, personal income tax shall be calculated and levied according to the "wage and salary income" item.

2. Considering that the amount of one-time economic compensation income obtained by individuals is relatively large, and the dismissed personnel may not have a fixed income for a period of time, the one-time economic compensation income obtained by individuals can be Wage and salary income is considered to be obtained for several months at a time and is allowed to be averaged within a certain period. The specific averaging method is: divide the one-time economic compensation income obtained by the individual by the number of years the individual has worked in the enterprise, and use the quotient as the individual's monthly salary and salary income, and calculate and pay personal income tax in accordance with the tax law. The number of years an individual has worked in the enterprise is calculated based on the actual number of years worked, and if it exceeds 12 years, it is calculated as 12.

3. The personal income tax payable on personal one-time economic compensation income calculated according to the above method shall be withheld by the paying unit in one lump sum at the time of payment and paid to the state treasury within the 7th day of the following month.

4. The housing provident fund, medical insurance, basic pension insurance and unemployment insurance funds actually paid by individuals in accordance with the proportions stipulated by the national and local governments shall be deducted when calculating taxes.

5. If an individual takes up a new position or is employed again after the termination of the labor contract, the one-time economic compensation income for which the individual has paid personal income tax will no longer be combined with the salary and salary income from the second appointment or employment. Calculate back payment of personal income tax. 6. This Notice shall be implemented from October 1, 1999. If the previous provisions are inconsistent with the provisions of this Notice, this Notice shall prevail.

September 23, 1999

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