Boom Times In China For Tax Advisers

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

14 January 2003

The crackdown on tax-dodgers by the Chinese authorities in 2002 has had one perhaps unexpected consequence - the arrival of a legion of tax advisers, lawyers and accountants from the West, and last week's high-profile humiliation of movie star Liu Xiaoqing will have done nothing to damp down demand from high-earning individuals and corporations for skilful management of their tax affairs.

Ms Xiaoqing, one of the country's top actresses, was arrested on charges of large-scale tax evasion by the Beijing Public Security Bureau last July, nearly three months after the local Taxation Bureau filed tax evasion cases for investigation and prosecution of the firms she ran. Last week, the tax authorities auctioned nineteen of her houses and apartments raising 6.6 million yuan (US$797,409) towards her outstanding tax bill, leaving 16.2 million yuan (US$1.96 million) unpaid, according to the tax authority.

Latest recruits to join the brigade of tax advisers in mainland China are Ernst & Young's two top men from Hong Kong: tax services chairman Stephen Lau Sing-hung left Hong Kong to live in Beijing on Friday and his deputy Alfred Shum Yuk-man will move to Shanghai, the latter said this week, adding that the company planned to move in further advisers from Germany, France, Japan and the United States.

Domestic demand for sophisticated tax services is a factor, said Mr Shum, but he also pointed to the oncoming rush of multi-nationals following China's admission to the WTO: "These companies like to have tax services to ensure they are complying with all the tax laws in the mainland," he said, adding that the firm now had 1,500 staff in Hong Kong and China.

Recommended