Kaizen - Revenue Alloceation Between The Central Government And Local Governments, China

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CHINA CORPORATE INCOME TAX

INFORMATION OF GENERAL INTERESTS ON ENTERPRISE TAXES

Revenue Alloceation Between The Central Government And Local Governments

According to the rules of the State Council on revenue sharing system, the tax revenue in China may divided into Central tax revenue, local tax revenue and the tax revenue shared between the Central and local governments.

(1) Central tax revenue: domestic Consumption Tax; Customs Duties; VAT and Consumption Tax collected by the Customs on behalf.

(2) Local tax revenue: Individual Income Tax; City and Township Land Use Tax; Farmland Occupation Tax; Fixed Assets Investment Orientation Regulation Tax; Land Appreciation Tax; House Property Tax; Urban Real Estate Tax; Inheritance Tax (not yet legislated); Vehicle and Vessel Usage Tax; Vehicle and Vessel Usage License Plate Tax; Deed Tax; Slaughter Tax; Banquet Tax; Agriculture Tax and Animal Husbandry Tax and their local surtaxes.

Tax revenue shared between the Central and local governments:

a. Domestic VAT: 75% for Central Government and 25% for Local Governments;

b. Business Tax: the part consolidatedly paid by the railway department, the headquarters of various banks and the headquarters of various insurance companies, and the additional 3% Business Tax paid by financial and insurance enterprises Resource Tax belong to the Central Government; and the rest is assigned to the local governments;

c. Enterprise Income Tax: income tax paid by Central enterprises, income tax paid by local banks and non-bank financial institutions, and the part consolidatedly paid by the railway department, the headquarters of various banks and the headquarters of various insurance companies belong to the Central Government; and the rest for local governments;

d. Income Tax on enterprises with foreign investment and foreign enterprises: the income tax paid by foreign funded Banks belongs to the Central Government, and others for local governments;

e. Resource Tax: the part for the Central Government is the tax paid by offshore oil enterprises, and the rest is for the local governments;

f. City Maintenance and Construction Tax: the part consolidatedly paid by the railway department, the headquarters of various banks and the headquarters of various insurance companies belong to the Central Government; and the rest to the local governments;

g. Stamp Tax: 88% of the Stamp Tax revenue collected on stock transactions for the Central Government; the remaining 12% for the local governments; and

h. Security Exchange Tax (not yet legislated and levied).

Appendix 1: China's Current Tax System

China's Current Tax System

Category of Taxes	Type of Taxes
Turnover Taxes	VAT
	Consumption Tax
	Business Tax
Income Taxes	Enterprise Income Tax
	Income Tax on Enterprises With Foreign Investment and Foreign Enterprise
	Individual Income Tax
Resource Taxes	Resource Tax
Resource Taxes	Urban and Township Land Use Tax
Special Purpose Taxes	City Maintenance and Construction Tax
	Farmland Occupation Tax
	Fixed Assets Investment Orientation Regulation Tax
	Land Appreciation Tax
Property Taxes	House Property Tax
	City Real Estate Tax
	Inheritance Tax
Behavioural Taxes	Vehicle and Vessel Usage Tax
	Vehicle and Vessel Usage Plate Tax
	Stamp Tax
	Deed Tax
	Security Exchange Tax
	Slaughter Tax
	Banquet Tax
Agriculture Taxes	Agriculture Tax
Agriculture Taxes	Animal Husbandry Tax
Customs Duties	Customs Duties

Notes:

1. Slaughter Tax, Banquet Tax and Animal Husbandry Tax are now decentralised to the local governments for administration. Whether levying or not shall be at the discretion of the governments at provincial level for decision by taking into account the local conditions.

2. Inheritance Tax and Security Exchange Tax have not yet legislated to date.




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