A landmark individual income tax reform

The pilot tax policy for deductable commercial health insurance products will be extended to the entire country on July 1. This pilot program for individual income tax was first implemented in 31 cities, including Beijing, Shanghai, Tianjin and Chongqing in 2016. According to the pilot, the amount paid to purchase health insurance products will be deducted from a person's taxable income before levying individual income tax (IIT) if it does not exceed 2,400 yuan ($347.76) a year.

The extension of the pilot across the country, along with the recent establishment of a separate IIT department by the Ministry of Finance, marks remarkable progress in overall tax reform.

Last year, IIT revenue exceeded 1 trillion yuan, accounting for almost 8 percent of China's total tax revenue, and it is expected to play an even more important role in the overall taxation system, with IIT reform set to be expedited.