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China's Golden Tax Project: A Technological Strategy for Reducing VAT Fraud


Jane K. Winn


University of Washington - School of Law

Angela Zhang


University of Hong Kong - Faculty of Law

July 16, 2010

Peking University Journal of Legal Studies, Vol. 4, pp. 1-33 (2013)
University of Washington School of Law Research Paper No. 2013-33

Abstract:     
Unlike the United States, where sales tax is a common form of indirect tax, almost all countries around the world - both developed and developing alike - now impose a value added tax (VAT). In the early 1990s, as part of its comprehensive economic reform program initiated over 30 years ago, the People’s Republic of China implemented a VAT. Monitoring compliance with VAT is a serious challenge in developing countries, however, and China is no exception in that regard. To address this challenge, China launched a major fiscal reform project called the “Golden Tax Project” (GTP) which mandates the use of specific sophisticated information technologies to improve compliance with China’s VAT laws. Although the Chinese GTP requires the use of information technology and so can be considered a form of “e-invoicing,” the focus is on creating a centralized matching system under the control of the tax authorities to reduce the incidence of fraud. In the EU, by contrast, the 2009 Report by the Expert Group on e-Invoicing focused on strategies for increasing the voluntary adoption of e-invoicing technologies among taxpayers in order to make EU businesses more competitive. The Chinese policy requires the use of stronger central controls than the EU policy, and includes stringent, new mandatory taxpayer duties, so it would not be suitable for use in developed economies with relatively high rates of voluntary compliance. The Chinese GTP strategy might provide a useful model for other developing countries struggling with large-scale, widespread VAT compliance problems, however.

Number of Pages in PDF File: 22

Keywords: Value Added Tax, VAT, Compliance, Electronic Invoicing, E-Invoicing, Golden Tax Project, China, Law Reform

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Date posted: July 19, 2010 ; Last revised: February 1, 2014

Suggested Citation

Winn, Jane K. and Zhang, Angela, China's Golden Tax Project: A Technological Strategy for Reducing VAT Fraud (July 16, 2010). Peking University Journal of Legal Studies, Vol. 4, pp. 1-33 (2013); University of Washington School of Law Research Paper No. 2013-33. Available at SSRN: http://ssrn.com/abstract=1641379 or http://dx.doi.org/10.2139/ssrn.1641379

Contact Information

Jane Winn (Contact Author)
University of Washington - School of Law ( email )
William H. Gates Hall
Box 353020
Seattle, WA 98105-3020
United States

Angela Zhang
University of Hong Kong - Faculty of Law ( email )
4th Floor K. K. Leung Building
Hong Kong
Hong Kong
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