Individual Income Tax Benefits for Purchase of Health Insurance Products (Suzhou Industrial Park)

Singapore Company’s China Expansion and Application for Available Grant
October 7, 2015

Dear Customers,

From the beginning of 2016Y, the Ministry of Finance, the State Administration of Taxation and China Insurance Regulatory Commission have introduced and implemented a preferential tax policy for individuals. Individuals who purchase health insurance products that conform to the regulations will be allowed up to RMB 2400/year deduction from their income. The specific regulations are as follows:

(I) Those individuals who receive wages and salaries or income from remuneration for continuous personal services; who also purchase the health insurance products that conform to the regulations will be allowed to deduct from the individual income tax up to RMB200 per month from the next month after the company submits the insurance certificate. Insurance premium payment in excess of RMB2400/year shall not be deductible for personal income taxes.

(II) In case where the company purchases the health insurance products for employees or the costs of health insurance products are jointly assumed by the company and the individual; the costs that are borne by the company shall be listed into Staff Salary Expense List per the real name of the staff. They shall be deemed as the individuals purchase. The premium payment up to RMB200 per month shall be deducted from the next month after purchasing of the products. If the insurance premium within one year exceeds RMB2400, the excess part shall not be deducted for personal income taxes purposes.

In order to acquire the preferential tax treatment, the following requirements are necessary:

1. Tax Preferential Identification Code

Tax Preferential Identification Code refers to a digital identification code that is sent to the insurance company after the commercial health insurance information platform verifies the policy holder according to the principle of “One Person, One Insurance Policy, One Code”. This is to ensure the uniqueness, authenticity and effectiveness of preferential tax commercial health insurance policy. This code is printed on the insurance policy.

2. Invoice and the Insurance Certificate

The invoice and the insurance certificate which are issued by the insurance company when selling the commercial insurance. They should carry the product name, payment amount, etc., and shall serve as evidence for pre-tax deduction. At present, the insurance production scope of the pre-tax deduction policy only includes Universal Life Insurance.