The collection of individual income tax on individual employees participating in enterprise annuity mainly involves three links: annuity payment, annuity fund investment, and annuity collection. On December 6, 2013, the Ministry of Finance, the Ministry of Human Resources and Social Security, and the State Administration of Taxation jointly issued the “Notice on Issues Concerning Personal Income Tax on Enterprise Annuities and Occupational Annuities” (Cai Shui  No. 103) (hereinafter referred to as Document No. 103), clarified that from January 1, 2014, the preferential tax-deferred tax policy for enterprise annuities and occupational annuities will be implemented. The so-called deferred taxation means that no personal income tax is temporarily collected in the annuity payment link and the investment income link of annuity funds, and the tax liability is deferred to the link where the individual receives the annuity, also known as the EET model (E stands for tax exemption, T stands for taxation).
In the annuity payment link, for the enterprise annuity or occupational annuity paid by the unit for employees by the relevant policies of the state, when it is included in the personal account, the individual does not pay individual income tax for the time being; the part of the annuity paid by the individual following the relevant state policy, the part within the prescribed limit will be temporarily deducted from the current taxable income of the individual.
In the investment process of annuity funds, when the income distribution from the investment and operation of enterprise annuity or occupational annuity funds is included in the personal account, no personal income tax will be levied for the time being.
In the process of receiving an annuity, on December 27, 2018, the State Administration of Taxation issued the “Notice on the Connection of Preferential Policies after the Amendment of the Individual Income Tax Law” (Cai Shui  No. 164), which improved some provisions of Circular 103. Adjustments have been made to the individual income tax treatment for receiving annuities: If an individual reaches the retirement age stipulated by the state, the enterprise annuity and occupational annuity received that meet the provisions of Circular 103 will not be consolidated into comprehensive income, and the tax payable will be calculated in full separately. Among them, the monthly tax rate table shall be used to calculate and pay the tax; the quarterly payment shall be calculated and taxed according to the monthly tax rate table; the monthly tax rate table shall be applied to the monthly payment amount; the comprehensive income tax rate table shall be used to calculate the tax payment. The annuity personal account funds received by an individual in one lump sum due to leaving the country for settlement, or the annuity personal account balance received in one lump sum by the designated beneficiary or legal heir after the death of the individual, shall be calculated and taxed according to the comprehensive income tax rate table. For individuals who receive funds or balances in an annuity personal account at one time except for the above-mentioned special reasons, the monthly tax rate table shall be used to calculate and pay taxes.