Expert Insight - Institute - 北京华政税务师事务所有限公司

Annual lump-sum bonuses refer to lump-sum bonuses paid to employees by administrative organs, enterprises and institutions based on their annual economic benefits and comprehensive assessment of their annual work performance, and also include year-end salary increases, annual salary and performance salary paid by units implementing the annual salary system and performance pay scheme based on the assessment.

Until 31 December 2023, resident individuals can choose to pay individual income tax on their annual lump sum bonuses separately (hereinafter referred to as "separate taxation"), or they can choose to pay individual income tax on their annual lump sum bonuses by combining them with their comprehensive income for the year (hereinafter referred to as "combining them with their comprehensive income").

Today, we will take a look at the difference between taxation of annual lump sum bonuses separately and taxation of integrated income with Hua Zheng

The annual lump sum bonus will be taxed as part of the current year's comprehensive income, which is beneficial to A, while the annual lump sum bonus will be taxed separately, which is more beneficial to B. Therefore, the choice of taxation method for the annual lump sum bonus should be judged on the basis of each individual's comprehensive income for the year, and the choice of whether to include the annual lump sum bonus in the comprehensive income can be made at the time of annual tax remittance

Concerns

The annual lump sum bonus is taxed as a separate month of salary and wages and is only allowed to be used once in a tax year.