Refining tax policy so AI development benefits more workers

The State Council has issued a guideline on adapting to AI development while building an employment-friendly growth model, with 18 tasks across six areas. The China Tax News analysis published on 4 November argues that AI both displaces and creates jobs, and that generative AI is now reaching knowledge-intensive, high-skilled roles, making employment polarisation sharper. Because personal income tax and social security financing rest heavily on labour income, they are the first to feel the strain. The author proposes embedding job-creation outcomes into the eligibility and gradation rules for tax incentives, giving more support to smart-upgrading projects that hire more people and rely on human-machine collaboration, and applying an employment-impact calibration to equipment deductions and accelerated depreciation for automation projects judged to be job-destroying. The article also suggests raising the pre-tax deduction ceiling for employee education funds and allowing carry-forward, widening the continuing-education special additional deduction for individuals, so that firms are encouraged to train existing staff in AI skills, and deepening cross-department data sharing among tax, human resources and market regulators so that employment policies can be pushed intelligently and granted without application.