A multi-layer network will soon be set up to protect confidential information of people who pay income tax for earnings above 120,000 yuan ($16,500) a year, the top taxation watchdog has said.

A man reads a book on taxation in a bookstore in Yichang, Hubei Province, recently. China will soon have a network in place to protect the confidential information of high income-tax payers. Ren Weihong

The disclosure of taxpayers confidential information is prohibited under any circumstance or for any purpose without their consent, says a circular issued by the State Administration of Taxation (SAT) Thursday.

Confidential information includes personal contact details, income and tax statements, business secrets and related internal files, an SAT official said.

The SAT issued the circular to ease some taxpayers concern over possible leak of information. The administration had not addressed the problem earlier, the official said, but stressed work had been reliable and sound till now.

The government last year asked high-income earners to declare their full earnings. The number of declarations this year is expected to cross last years 1.63 million, the official said.

Last year, personal income tax revenue added up to 31.85 billion yuan ($4.37 billion), up 29.9 percent over 2006, SAT division chief Shu Qiming said.

Though the administration has reiterated that stock exchange earnings are not taxable, some reports say complicated procedures and concerns over leak of private information have been preventing stock investors from submitting statements before the March 31 deadline.

About 81 percent of the taxpayers who submitted their declarations in time last year were from Beijing and the coastal economic powerhouses of Shanghai, Shenzhen, Xiamen, Qingdao and Ningbo, as well as some cities in Jiangsu Province.

The National Peoples Congress, the countrys top legislature, amended the income tax law last month and raised the individual income tax threshold from 1,600 yuan ($220) to 2,000 yuan a month. The move is aimed at easing medium- and low-income earners burden given the rising cost of living. The amendment takes effect from March 1, 2008.

The change will cut government revenue by 30 billion yuan ($4.1 billion) a year. But then it will exempt 70 percent income earners from paying tax. About 50 percent are exempt now.