China's State Council is introducing new regulations designed to facilitate the enforcement of the new individual income tax. The new initiative features an increased monthly tax exemption threshold. Premier Wen Jiaobao signed an order to approve the regulations that take effect September 1st.

The National People's Congress Standing Committee, or China's legislative body, adopted the amendment to the individual income tax law last month. The amendment raises the monthly tax exemption threshold from two thousand yuan to 35-hundred yuan.

The new law reduces the previous nine-bracket system to a smaller seven-bracket system, eliminating thresholds corresponding to tax rates of 15 and 40 percent.

It also reduces the minimum tax rate from five to three percent for people whose monthly income is between 35-hundred and 45-hundred yuan.