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Personal Income Tax Across Asia

Contributed by BridgeWest
November 15, 2017

Personal income taxation in Asian countries refers to the income tax applied to natural persons, who are considered tax residents in one of the Asian jurisdictions. The manner in which personal taxation is applied in the Asian region depends on the national laws applicable in a particular jurisdiction. For example, in Japan, the taxation of personal income is performed on a self-assessment system, but local companies are also required to impose a withholding system. 

Taxation in India

In India, the taxation of natural persons is determined based on their residency status and individuals are taxed on a progressive system, as follows:

  • income up to INR 250,000 is exempt from taxation;
  • income between INR 250,001 – INR 500,000 is imposed with a 5% rate on the excess over INR 250,000;
  • income between INR 500,001 – INR 1,000,000 is taxed with a rate of 20% on the excess over INR 500,000
  • incomeabove INR 1,000,001will be imposed with a rate of 30% on the excess over INR 1 million.

The above mentioned tax scheme is similar with the one applicable on the personal income tax in Singapore, where citizens are taxed based on a progressive scheme, with rates ranging between 0% and 22%.

Taxation in Japan

In another Asian jurisdiction, Japan, the personal taxation is also imposed under the national legislation on a progressive basis. The national taxation system requires Japanese citizens to pay taxes ranging from 5% to 45% of their taxable income. The income tax is imposed on a yearly basis, taking into consideration the income earned in that respective time period. Personal taxation is applicable to the following entities:

Besides the national level, Japan imposes taxes on the following levels as well:

  • prefectural;
  • municipal;
  • prefectural income tax, available for the self-employed persons.

Taxation in China

The Chinese citizens, as well as foreigners performing taxable activities in China, are imposed with the individual income tax (IIT), which is available for 11 types of income categories. Just like in the case of the above mentioned countries, China applies a progressive system, where income is taxed with rates between 3% - 45%.

Other tax systems in Asia 

Most of the Asian jurisdictions impose a progressive tax base, which is generally applicable at a national level. For example, taxation in Malaysia  has 10 categories of income, all applicable at a national level, with no other local taxes.

Another similar legislative system is the one available in Thailand, a country which applies a tax system imposed to tax residents at rates between 5% - 35%. The legislation was recently modified for the top income levels. In 2016, income between THB 2,000,001 – THB 4,000,000 was imposed with a rate of 30%, while in 2017, this category was extended to income up to THB 5,000,000, which in 2016 would have been imposed with a higher rate, of 35%. Persons who are interested in this subject can contact a team of Thai lawyers, who can offer further information on the personal taxation.

Foreigners interested in the taxation systems available in the Asian countries should know that certain parts of the legislation on this matter follow the same structure available in the case of European jurisdictions. In this sense, we mention the taxes in Spain on personal income, which are also applicable on a progressive basis.


Tags: tax | law | Japan | legislation | China | individuals | Tax | interest | India | Singapore | Spain | Thailand | individual income tax | Europe | Other | Malaysia



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