Research On Legal Issues Of Special Additional Deduction For Individual Income Tax

With the deepening of economic reform,China’s economy maintain trend of steady development.In order to coordinate macro-control under the new economic pattern,China revised the Individual Income Tax Law（hereinafter referred to as the "Individual Tax Law"）in 2018.The newly revised Individual Tax Law reflects one feature and six items: in order to increase the basic deduction amount,six special additional deduction items are added,like housing rent,housing loan interest,medical treatment for critical illness,supporting the elderly,children’s education and continuing education,and three major categories are covered,like medical treatment,housing and education.On March 28th,2022,the State Council issued the Circular of on Establishing of Special Additional Deductions for Individual Income Tax in Respect of the Care Expenses for Children Under Three Years Old（the "Circular"）,which makes a useful supplement to the special additional deduction.The revision of the new law has made remarkable contributions to tax fairness and can effectively promote economic development.Meanwhile,as a supporting provision,Operational Measures for Special Additional Deductions for Individual Income Tax（for Trial Implementation）effectively promote the implementation of special additional deductions.Throughout the reform of the tax law,many substantive innovations has been proposed.Promoting a mixed tax system combining synthesis and classification,optimizing the tax rate structure,adding anti-avoidance clauses,and highlighting the characteristics of individual income tax system that keep pace with changing times are profit to adjust the structure and promote development of economic distribution,push forward social justice,as well as make every taxpayer enjoy rights of tax reforms.As the major breakthrough in this reform,the special additional deduction system has been implemented for three years.This system not only takes individual differences into account,but also demonstrates the fairness of the government’s tax policy.The reform of individual income tax system reflects the strong will of Chinese residents to deduct personal actual living expenses.It also reflects that the focus of the reform of personal income tax is no longer to adjust personal income distribution,but to pay more attention to improving people’s livelihood as well as promoting social equity and justice.But at the same time,it also shows some problems,such as low level of legislation,careless formulation of specific rules,lack of supporting regulations,etc.The thesis starts with the background of individual income tax special additional deduction and gathers a variety of research methods.Through elaborating the theoretical basis of the pre-tax deduction,which involves the tax fair principle,the ability-to-pay principle of taxation and the principle of right to live,the thesis summarizes and differentiates the types of pre-tax deduction,and comprehensively explains the connotation of special additional deductions.Based on the above theoretical analysis,taking the current implementation situation of China’s legislation as the breakthrough point,the thesis focus on the problems to make horizontal comparison of the special additional tax deduction system among three developed countries’ specific implementation and experience,including the United States,Britain and Japan.After learning from them,the thesis aims to make suggestions for the improvement of China’s relevant systems.In terms of optimized path,this thesis explores the reform approach of China’s special additional tax deduction system from three dimensions,including the legislative design,specific rules,and supporting provisions,to make it more scientific and complete.The author looks foward to providing useful perspectives and ideas for China’s tax reform direction,and hopes this thesis pave the way for improving the tax collection and management level and making China’s tax legal system to a higher level.