How to deal with Chinese taxation reform
First published in China Business News, 27 May 2014
The taxation defect is increasingly obvious with the development of economic maturity. Progressing national administrative systems by modernising management capabilities is a natural consequence of market development. Taxation reform and the construction of a modern tax system are natural by-products of growing economies.
Chinese tax revenue has increased by 18.3% every year from 2005 to 2013, which is much higher than the increasing rate of GDP. Just compared with 2012, the total tax revenue in 2013 increased 9.8%, to RMB 11,000 billion with valued-added tax, enterprise income tax and business tax comprising 62% of the total tax revenue.
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These figures may change in the future. Eddie Wang, Taxand China, said "the total tax revenue of China will not increase or decrease dramatically in the future, but will adjust between different kinds of taxes. The key tax source will be transferred from indirect taxes to direct taxes, which will finally bring China in line with the international standard."