The following categories of individual income shall be subject to individual income tax:

(1) Income from wages and salaries;

(2) Income from remuneration for personal services;

(3) Income from author’s remuneration;

(4) Income from royalties;

(5) Income from business income;

(6) Income from interest, dividends and bonuses;

(7) Income from leasing of assets;

(8) Income from transfer of assets; and

(9) Incidental income.

For forms of income (1) through (4) in the preceding paragraph (hereinafter collectively referred to as "Comprehensive Income") earned by a resident individual, they shall be aggregated on a tax year basis to calculate the individual income tax payable while the same earned by a non-resident individual shall be calculated separately on a monthly or transaction basis. For forms of income (5) through (9) in the preceding paragraph, the individual income tax payable shall be calculated separately pursuant to the provisions of this Law.

Individual Income Tax Rates

(1) For comprehensive income in excess of the specified amounts, progressive tax rates ranging from 3 percent to 45 percent shall apply;

(2) For income from business operation in excess of the specified amounts, progressive tax rates ranging from 5 percent to 35 percent shall apply (see schedule of tax rates attached); and

(3) For income from interest, dividends or bonuses, income from leasing of assets, income from transfer of assets, and incidental income, a flat tax rate of 20 percent shall apply.

[For details on the progressive tax rates, please refer to the Individual Income Tax Law of the People's Republic of China]