Tax officials admit bonus 'directive' was a fake

A red-faced State Administration of Taxation yesterday denied that it had ever issued a directive explaining how to calculate taxable income from year-end bonuses - despite it being reported as fact in official media over the weekend.

The administration vowed to pursue those who had fabricated the 'false' document that had 'confused and misled the public'.

The 'document' followed recent revisions to the Personal Income Tax Law that avoided any mention of annual bonuses.

So when it was reported that the directive had been released, people thought that officials had finally addressed the issue.

On Saturday, the official Guangzhou Daily reported that 'Notice No 47' from the tax administration had announced that new tax rules covering annual bonuses would come into effect in September.

These, the report said, would rectify a controversial method of tax calculation in which some taxpayers receiving lower bonuses end up taking home more pay than higher rewarded workers who have been pushed into higher tax brackets.

Xinhua carried a similar report on its online edition on Sunday, and this was followed-up in yesterday's printed edition of the People's Daily.

The phoney directive also specified that dividends and yields from stock holdings were subject to tax.

Year-end bonuses represent a major portion of a mainland worker's annual income, and news that the tax directive was a fake disappointed many people.

Some questioned why tax officials had taken two days to deny the reports, given that it involved such an important topic and that their delay only created unnecessary confusion.

It remains unclear where Guangzhou Daily got its information. The reporter who covered the story yesterday refused to return phone calls from the South China Morning Post.