China has been trying to use income distribution reforms to narrow the gap between different groups. That triggered rumours that the country was going to raise tax rates for people with annual incomes of more than 120,000 yuan.

However, the Finance Ministry said Monday that the tax increase talk was "pure rumour." The ministry also said that annual income of 120,000 yuan was not the standard used to define the high income group in China.

The ministry said the 120,000-yuan level was only a dividing line since 2006 for asking people to voluntarily file and pay income tax.

"120,000 yuan is a content from the tax declaration system. It is different from the criteria defining low income and high income. Moreover, low income and high income can be a relative concept. The threshold of the tax declaration can be changed as time changes," said Liu Shangxi, director.