Tax Administration Reform In China

Tax administration improvements have contributed significantly to a doubling of China’s tax-to-GDP ratio and the substantial reduction in taxpayers’ compliance costs since the mid-1990s. This paper describes the key features of China’s tax administration and their evolution over the last 20 years. It also identifes emerging challenges to the tax system and areas where further tax administration improvements are needed to sustain tax revenue and reduce taxpayers’ compliance costs in the future.

China is now facing the challenge of designing and carrying out new reforms of its taxation system. This book covers a wide range of topics critical to China's future tax reform. Several prominent scholars and government officials have contributed papers which range from general tax issues to specific problem areas in tax policy design, implementation and legislation in China. The collaborative efforts between the Chinese and foreign scholars combine first hand knowledge of the current situation of China's tax reform with modern economic theory and methodology, and highlight key issues which are the focus of research on China's tax system today. Several papers also examine the linkages between tax reform and reforms in other areas in China, such as monetary and housing reforms, thus giving a more complete picture of the task ahead.

The chapter on tax administration and legislative principles addresses the basic concepts that need to be observed in designing effective, equitable and efficient tax reform. The use of taxation as a policy tool and rights and obligations of taxpayers are also dealt with. The chapter on individual income tax provides a conceptual overview of a modern individual income tax system that the authors recommend as the longer-term framework for China's short and medium-term decisions on tax reforms. The chapter on enterprise income tax, taking into account China's intention to modernize the enterprise income tax system and replace the two current laws on enterprise tax with one law, discusses the building blocks of a modern system. The chapter on VAT and business tax develops a VAT design against the background of VAT models and sources of VAT law in other countries and addresses the desirability of VAT and business tax being merged. The chapter on China's WTO accession and tax reform discusses China's WTO-related obligations in the area of taxation.

This report looks at crucial elements of reforms to growth-friendly recurrent taxes on immovable property. Tax design practices in place in OECD and partner countries are compared and analysed through the lenses of economic theory and empirical analysis.

​This book discusses China’s tax system, presenting a comprehensive and systematic research based on a multidisciplinary approach involving economics, finance, political science, sociology, law, public administration, history, and econometrics.With China moving toward the rule of law, this book proposes reforms to the tax laws and the stratified governance with a view to achieving tax neutrality, law-based taxation, tax equality and tax burden stability. It focuses on clarifying the implications, extension, nature, and features of a law-based tax system as well as the logical relationships between the optimization of the tax system structure, modern governance, law-based tax administration, as well as the tax-sharing system of tax collection and the rule of tax law. It suggests that optimizing the tax structure, reforming the tax-sharing system, improving local taxes, and restructuring the tax collection and management system will push China's tax system toward sound design and rule of law.This book is intended for scholars specializing in China’s tax system and general readers interested in China’s economy.

First systematic study of Chinese taxation, applying novel legal and economic analyses - an essential reference on the subject.

This book examines questions of change and inertia in the context of the longstanding grievances over excessive taxation in rural China. How can some changes be sustained, whilst others cannot? How can a longstanding administrative practice be changed or even terminated, especially when previous attempts at change have failed? Using extensive interview data with local and central bureaucrats, Li's findings highlight the role of parallel developments and agency in the change process, as well as the prevalence of contingency and uncertainty. It also elegantly blends the narrative of the rural tax and administrative reforms with theoretical discussions to deepen our understanding of policy process and institutional change in 21st century China. Despite the authoritarian political system, the Chinese state-in-action which emerges from this book sees actions stemming from both the central and local levels, mediated by strategic design as well as contingency. This book will be of interest to students and scholars of Chinese Studies, political science and policy and development studies.

Building on previous FAD work in the tax administration field, this paper defines broad criteria for diagnosing the problems in a country’s tax administration and formulating an appropriate reform strategy. To be effective, this strategy should be based on the size of the tax gap and the country’s particular circumstances. This paper discusses some guiding principles which have provided the basis for successful reforms, including: reducing the tax system’s complexity, encouraging taxpayers’ voluntary compliance, differentiating the treatment of taxpayers by their revenue potential, and ensuring the reform’s effective management. Also discussed are specific bottlenecks that hinder the effectiveness of the tax administration’s operations.