Taxes in China

Overview

Taxes are the single largest and most important form of revenue for the People’s Republic of China. In 2008, China’s gross tax income was nearly 930 billion dollars, and has increased nearly 10% in 2009. The Ministry of Finance is responsible for all tax affairs in the country. Future tax efforts of the country plan to cut taxes for corporations up to 9%.  Manufacturing is a large industry in China and hopes of decreasing taxes for these corporations may increase productivity. There are 26 different types of taxes in the People’s Republic of China. They are divided into 8 different categories. A few of the categories include types of property, agricultural, and income taxes. Foreign taxes do not follow the typical structure of governmental taxes. Companies with foreign entities are often treated with foreign tax laws. Most foreign tax laws work with corporations to provide breaks in tax law in order to increase economical output.

Legislation

The overall tax policies are decided by the Ministry of Finance in China, but are enacted through several other agencies of the government. Local tax laws do not always follow the same procedures. Tax law creation follows a strict four-step process. The four steps include drafting, examination, voting, and promulgation. Legislation also provides tax provisions with over 60 foreign countries and entities.

Ministry of Finance

The Ministry of Finance of the People’s Central Government oversees all major tax laws along with the annual budget and statistics for the country. Some lower level expenditures and regulations are overseen by this agency also. The ministry often publishes public and private information on the past and current economic trends of the People’s Republic of China. The Ministry of Finance does not handle interest rates, banking regulations, and other similar financial aspects.

The SAT

The State Administration of Taxes is the agency that enforces tax law, and is the highest tax authority in the People’s Republic of China. Generally, the SAT reviews economic policies and governs how to control the overall macro-economy. The SAT also deals with the collection of central, agricultural, and shared taxes. Internationally, they work with external buyers and conventions to appropriate certain tax laws. Perhaps one of the largest duties the SAT deals with currently is the determination of taxes for education and how programs are funded with tax revenue.