OVERVIEW OF CHINA'S CURRENT
TAX SYSTEM
Type of Taxes
Tax is the most important source of fiscal revenue of
China. It is also an important economic lever utilized
by the State to strengthen macro-economic regulation,
which produces important impacts on China' s economic
and social development. After the tax system reform in
1994 and the fine-tuning of it in subsequent years, China
has preliminarily built up a tax system adaptable to the
socialist market economy, which has been playing an important
role in assuring China's fiscal revenue, broadening the
opening to the outside world and promoting the sustained,
fast and healthy development of China's national economy.
1. TYPE OF TAXES
Under the current tax system in China, there are 25
types of taxes, which, according to their nature and
function, can be divided into the following 8 categories:
a) Category of turnover taxes. It includes 3 kinds
of taxes, namely, Value - Added Tax, Consumption Tax
and Business Tax. The levy of these taxes are normally
based on the volume of turnover or sales of the taxpayers
in the manufacturing, circulation or service sectors.
b) Category of income taxes. It includes Enterprise
Income Tax (applicable to such domestic enterprises
as state-owned enterprises, collectively-owned enterprises,
private enterprises, joint operation enterprises and
joint equity enterprises), Income Tax on Enterprises
with Foreign Investment and Foreign Enterprises, and
Individual Income Tax. These taxes are levied on the
basis of the profits gained by producers or dealers,
or the income earned by individuals.
c) Category of resource taxes. It consists of Resource
Tax and Urban and Township Land Use Tax. These taxes
are applicable to the exploiters engaged in natural
resource exploitation or to the users of urban and township
land. These taxes reflect the chargeable use of state-owned
natural resources, and aim to adjust the different profits
derived by taxpayers who have access to different availability
of natural resources.
d) Category of taxes for special purposes. These taxes
are City Maintenance and Construction Tax, Farmland
Occupation Tax, Fixed Asset Investment Orientation Regulation
Tax and Land Appreciation Tax. These taxes are levied
on specific items for special regulative purposes.
e) Category of property taxes. It compasses House Property
Tax, Urban real Estate Tax, and Inheritance Tax (not
yet levied).
f) Category of behaviour taxes. It includes Vehicle
and Vessel Usage Tax, Vehicle and Vessel Usage License
Plate Tax, Stamp Tax, Deed Tax, Securities Exchange
Tax (not yet levied), Slaughter Tax and Banquet Tax.
These taxes are levied on specified behaviour.
g) Category of agricultural taxes. The taxes belonging
to this category are Agriculture Tax (including Agriculture
specialty Tax) and Animal Husbandry Tax which are levied
on the enterprises, Units and/or individuals receiving
income from agriculture and animal husbandry activities.
g) Category of customs duties. Customs Duties are imposed
on the goods and articles imported into and exported
out of the territory of the People's Republic of China.
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