OVERVIEW OF CHINA'S CURRENT TAX SYSTEM Revenue Allocation between the Central Government and the Local Governments
Currently, the taxes and duties in China are respectively administered
by financial department, tax administration and customs administration.
(1) The items that are collected and administered by the offices
of SAT include: VAT; Consumption Tax; Business Tax, Income Tax
and City Maintenance and Construction Tax consolidatedly paid
by the railway department, the headquarters of various banks,
and the headquarters of various insurance companies; the additional
3% Business Tax paid by financial and insurance enterprises;
Income Tax on central enterprises; Income Tax on joint operation
enterprises and joint stock enterprises with investment from
both the central and local enterprises and/or institutions;
Income Tax on local banks and non-bank financial enterprises;
Income Tax and Resource Tax on offshore oil enterprises; Income
Tax on enterprises with foreign investment and foreign enterprises;
Security Exchange Tax (i.e., the Stamp Tax levied on security
transactions prior to the commencement of Security Exchange
Tax); late payment fines, late payment collection and fines
with respect to the central taxes.
(2) The items that are collected and administered by local tax
bureau are: Business Tax; City Maintenance and Construction
Tax (excluding the part collected by the SAT); Income Tax on
local government's enterprises, collective enterprises and private
enterprises; Individual Income Tax; Resource Tax; City and Township
Land Use Tax; Farm Land Occupation Tax; Fixed Assets Investment
Orientation Regulation Tax; Land Appreciation Tax; House Property
Tax; Urban Real Estate Tax; Vehicle and Vessel Usage Tax; Vehicle
and Vessel Usage Plate Tax; Stamp Tax; Deed Tax; Slaughter Tax;
Banquet Tax; Agriculture Tax and Animal Husbandry Tax and their
local surtaxes; Inheritance Tax (not yet legislated); local
tax late payment fines, collection of late payment and fines.
In most part of China, the Agriculture Tax and Animal Husbandry
Tax and their local surtaxes, Deed Tax, Farmland Occupation
Tax are collected and administered by the financial departments
of the local governments.
By the beginning of 1999, the numbers of taxpayers registered
with the SAT the local tax bureau are respectively 11.247 million
and 13.03 million. In order to strengthen tax collection and
administration, reduce administrative costs, avoid work overlapping
and simplify tax payment for the convenience of taxpayers, on
some occasions, the SAT and the local tax bureau may entrust
each other for collecting certain taxes on behalf.
(3) In most area of China, the Agriculture Tax, Animal Husbandry
Tax and its Local surtax, Deed Tax and Farm Land Occupation
Tax are now collected and administered by the financial departments
of Local governments.
(4) The items that are collected and administered by the Customs
Department are: Customs duties; import duty on luggage and postal
articles. In addition, the Customs Department also collects
the VAT and Consumption Tax the stage of importation or exportation
on behalf of the State Administration of Taxation.
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