China's Tax Revenue Increases By 30% In First Half Of 2008

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

22 July 2008

China's tax revenues have grown by a colossal 30.5% on an annual basis, soaring to a record 3.26 trillion yuan in the first half of 2008, the country's State Administration of Taxation (SAT) announced on Tuesday.

SAT officials have speculated that the surge is a direct result of the dramatic increase in company revenues throughout 2007, which in turn raised the amount of corporate tax being paid.

According to statistics, almost half of the tax revenue came from value-added, consumption and turnover taxes, which rose 22.4%, 18.5% and 25.7% year on year, respectively.

The second largest generation of taxes came from stamp duty, which grew by 34.2% to 83.7 billion yuan.

The Chinese government cut stamp duty earlier on in the year from 0.3% to 0.1% in a bid to boost investment opportunities within the country.

A spokesman for the National Bureau of Statistics, Li Xiaochao, claimed the increase in tax revenue will assist China in implementing its fiscal policies and fund projects that would improve living standards, in spite of the global economic slowdown.

However, Qian Guanlin, deputy commissioner of the SAT, has been quick to warn that because of this year's dramatic increase in tax revenue, next year's might not be so promising.

Qian went on to suggest that it would be wise for the country's government to begin implementing measures which include taxation analysis, strengthened tax collection and better taxation in the second half of the year in order to maintain such levels of revenue.

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