China Sees 18.9% Boost In Q1 Tax Revenues

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

10 April 2006

Rapid economic growth helped China collect 898.8 billion yuan (US$112 billion) in taxes in the first quarter of this year, an 18.9 percent year-on-year increase, the State Administration of Taxation reported on Thursday.

The figure, which excludes revenues from customs tariffs and the farming sector, represents an increase of 142.9 billion yuan over the same period of last year.

Larger takings in income tax and turnover tax contributed the most, accounting for nearly 75 percent of the rise in tax revenue.

While growing economic activity was thought to be the main reason for the increase, a more concerted effort to enforce tax compliance also helped to boost tax collections, the tax authority stated.

The eastern areas of China contributed the most to total tax collections, accounting for more than 70 percent of the overall figure.

Last year, tax revenues greatly exceeded government forecasts as the final tally reached a record 3,087 billion yuan.

Continued economic growth is expected to push revenue collection higher still in 2006, when China's tax revenue is estimated by the government to rise 17.5% to 3.61 trillion yuan (US$450 billion).

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