The China Insurance Regulatory Commission (CIRC), Ministry of Finance (MoF) and State Administration of Tax (SAT) have jointly issued Circular No. 39 (2017) providing for the nationwide extension of preferential tax treatment of “qualified” commercial health insurance for employees.


Following on the success of a trial program launched in 31 cities in 2016, employees nationwide will be able to claim up to CNY 2,400 per year in income tax deductions for individual premiums for “qualified” commercial health insurance products from July 1, 2017. Qualified commercial health insurance products are defined by the Circular and sold by insurers approved by the CIRC. Where the premium is paid in part or in total by the employer, the deduction will be capped at CNY 200 per month. The employer’s share of the cost will be considered as part of the employee’s gross pay but will be deductible by the employee for individual income tax (IIT) purposes.

The full text of Circular No. 39 is available here (in Chinese). The CIRC has published a list of insurers selling qualified policies on its website.


Employers in China offering private health insurance (75% of firms surveyed by Willis Towers Watson in 2016) should review their health insurance and withholding arrangements in light of the new tax break. The average employer cost of supplemental health benefits provided to the employee by surveyed companies varies depending on the employee category from CNY 2,700 to CNY 3,830 for executives and general management.

According to the World Health Organization out-of-pocket heath care expenditure accounts for less than 2% of China’s GDP.