China confirms tax reforms on the way
10 March 2014
Posted by: Author: Mary Swire
Author: Mary Swire (Tax-News)
At a press conference at the National People's Congress, China's Minister of Finance Lou Jiwei presaged more tax reforms in the coming year after the recent expansion of the value added tax pilot scheme.
Lou pointed out that it has already been agreed to extend the VAT pilot scheme, which replaces business tax in China to prevent double taxation, to include the telecom services, and later this year the railway and postal sectors.
Two of the Government's main tasks in the coming year, he said, would be the promotion of property tax reform and modifications to the taxation of resources, especially with regard to environmental factors.
Lou confirmed also that the Government is working on the structure of consumption import and excise taxes, with the particular intention of boosting industrial output.
The Government is also to look at various tax incentives, particularly those granted at provincial level, to ensure that they are market-driven, not merely preferential, and to ensure that they are not distorting competition. Tax reform will, henceforth, have to be introduced by legislation through the NPC, and not by either central or regional government, he said.
Lou also disclosed that the Government would try to instill more equity and fairness into China's individual income tax code. However, he was also of the opinion that a further rise in the current individual income tax threshold of RMB3,500 (USD570) per month, to perhaps RMB5,000, would not be the complete answer, as consideration should also be given to other expenses, such as the cost of dependents, when redesigning the income tax regime.
This article first appeared on tax-news.com.