A Historical Account of Taxes on Goods and Services in the Transition to Post-Socialist China
Peter Harris and Dominic de Cogan (eds.), Studies in the History of Tax Law, Vol 7
Posted: 19 Aug 2015
Date Written: September 2015
The taxes on goods and services, subject to a very brief interruption, have been separately applied since their inception in early times in modern China. Until now, the Value Added Tax (VAT) is still an incomplete tax as the tax on goods is separate from the tax on services according to the basic legislation, although the two taxes are moving towards an integrated system. The adoption of bifurcated taxes on goods and services has caused a number of problems for the economy and businesses. The question is why the government did not choose a normal VAT system in the first instance if the separation is inefficient. This chapter addresses the question by way of an examination of the historical development of the system of taxes on goods and services in modern China and argues that the design of the system was historically constrained by a number of factors including economic foundations, the level of tax administration and inter-governmental fiscal relations.
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