24 Years Later - China Finally Centralizes Its Tax Administration

6 Pages Posted: 20 Jun 2018

See all articles by Na Li

Na Li

Institute for Austrian and International Tax Law, Vienna University of Economics and Business (WU)

Richard Krever

University of Western Australia Law School

Date Written: April 23, 2018

Abstract

As part of a substantial overhaul of its tax system, in 1994 China established two tax administration systems, one under the control of the central government and separate agencies in each province supervised by provincial governments. Responsibility for collecting individual and company income taxes, VAT on the sale of goods and Business Tax on the provision of services was divided between the two levels of tax administration. The Business Tax was assigned exclusively to the provincial tax offices and all revenue from the tax was retained by provincial governments. Commencing in 2012, the central government began shifting the Business Tax base into the VAT, which became a conventional VAT that applied to both goods and services. The transfer was completed in 2016. Along with the centralization of all tax revenue, the government announced in March 2018 that it would incorporate the provincial tax administrations into the central State Administration of Taxation. A temporary arrangement has seen the central government distribute to provincial governments, which lost their Business Tax base, a higher share (formerly 25 per cent and now 50 per cent) of VAT revenue it collects. However, it remains to be seen to what extent centralization of tax administration may be related to longer term realignment of tax distribution in China.

Suggested Citation

Li, Na and Krever, Richard, 24 Years Later - China Finally Centralizes Its Tax Administration (April 23, 2018). Tax Notes International, Vol. 90, No. 5, 2018, Available at SSRN: https://ssrn.com/abstract=3189230

Na Li

Institute for Austrian and International Tax Law, Vienna University of Economics and Business (WU) ( email )

Althanstrasse 39-45
A-1090 Wien
Austria

Richard Krever (Contact Author)

University of Western Australia Law School ( email )

M253
35 Stirling Highway
Crawley, Western Australia 6009
Australia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
130
Abstract Views
987
Rank
475,297
PlumX Metrics