Beijing Awash With Tax Revenues As Chinese Economy Booms

by Mary Swire, Tax-News.com, Hong Kong

10 July 2006

China's booming economy continues to produce a torrent of tax revenues for the government, which announced that fiscal revenues grew by 22.3% year-on-year in the first six months of 2006.

Corporate tax revenues appear to be the driving force behind the increasing revenue flows. Company receipts collected by the tax authorities grew by 30.2% in the first half of 2006 compared with the same period in 2005, the Chinese media has reported, citing statistics from the Central Administration for Taxation.

Value added tax revenues also saw substantial growth, increasing by 20.1% in the period in question.

Total tax revenues reached a record 1.93 trillion yuan (US$240 billion) in the first half of this year.

Last month, China's Finance Minister Jin Renqing told the Chinese legislature that tax revenues grew by 20% in 2005 when the total tax take reached a record 3,393 billion yuan (US$424 billion). The latest set of figures would appear to indicate that this record will be broken when the full 2006 tax revenues figures are known.

The two largest sources of tax revenues in 2005 were value added tax (VAT) (793.1 billion yuan, US$99 billion), and taxes and tariffs on imports (527.7 billion yuan, US$65.9 billion).

China's gross domestic product grew by an estimated 9.9% in 2005, and a similar level of economic growth is expected in 2006.

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