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China?s Impact On Trade Relations Remains Surprisingly Small


CHINA will press ahead this year with efforts to reform resource taxes and unify corporate income levies for domestic and overseas firms, authorities said yesterday as they reported record tax collections for 2005.

Xie Xuren, director of the State Administration of Taxation, said China will also work to revise taxes covering the use of farmland for nonagricultural purposes, readjust administrative mechanisms for contract taxes and create programs to introduce a "pro-business" transformation of the value-added tax.

Addressing a national conference on taxation, Xie said China will continue to improve policies on export tax rebates, individual income taxes and taxes designed to increase the efficient use of energy and other resources.

He pledged to implement new policies to readjust tax rebates on energy-intensive, pollution-creating exports, to forge tax policies that promote technology upgrades by business and industry and to study methods for encouraging innovation.

Xie said China will continue to carry out policies benefiting farmers and agricultural and rural development as part of the nation's goal to narrow the widening wealth gap between the cities and the countryside.

Meanwhile, China will step up the collection of taxes from overseas-funded firms and improve regulations governing multinationals to prevent tax evasion, he said.

The country will also work to retool tax policies to encourage the restructuring of China's cultural sector, including preferential treatment of select computer game products and deductions for charitable donations, the director said.

Xie also revealed yesterday that China posted a record 3.086 trillion yuan (US$381 billion) in tax revenue in 2005, excluding tariffs and agricultural taxes, an increase of 20 percent year on year.

Xie said the rise was the result of China's rapid economic growth.

Revenue from the domestic value-added tax, consumption tax and sales tax totaled 1.656 trillion yuan, up 18.2 percent.

Income tax revenue from domestic and overseas-funded firms and individuals stood at 760.5 billion yuan, a 30.9 percent rise, Xie said.

Tax revenue from China's east, the country's richest region, amounted to 2.183 trillion yuan, up 19.2 percent, while revenues from central regions stood at 481.7 billion yuan, up 22.4 percent year on year.

Western China registered 421.5 billion yuan in tax revenues, up 21.7 percent.