Beijing will start taxing individuals a flat 20 per cent on their interest from yuan and foreign-currency deposits from November 1.
From every 1,000 yuan (about HK$933) saved, individuals would earn 4.50 yuan less a year from their interest based on the prevailing one-year deposit rate of 2.25 per cent, it was revealed yesterday.
The move is aimed at forcing mainland residents, who hold nearly six trillion yuan in personal savings, to spend and help boost the faltering economy.
Analysts have long been doubtful of the effectiveness of such a move.
Interest accrued before November 1 and interest from educational savings accounts and other special deposits endorsed by the government would not be excluded, Xinhua news agency said.
Financial institutions would collect the tax on behalf of the government, it said.
