China cuts individual income tax on bank savings

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China’s State Council has announced that individual income tax on bank savings will be cut from 20 percent to 5 percent starting August 15, 2007.

Income tax was leveled on personal bank savings on Nov. 1, 1999 as a means of encouraging consumption and investment, adjusting personal income and increasing national revenue. This reduction is an attempt to leverage the inflation caused by overinvestment in recent years.