Chinese Businessman Brags About Paying His Taxes

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

30 July 2002

After Chinese Premier Zhu Rongji launched a public debate at the end of last month by attacking the 10 richest people in China for paying no taxes, one of the richest men in China said last week that he had paid almost four million yuan (US$500,000) in taxes in the past 18 months.

Nan Cunhui, president of the private Zheng Tai Group, which had sales last year of 6.17 billion yuan, said he had paid 1.23 million yuan in taxes last year and 2.76 million in the first half of this year. Mr Nan, a member of the National People's Congress, said his income was partly from salary and bonus based on results, which averages 80,000 yuan a month, and partly from dividends. He owns 75 per cent of Zheng Tai. He said the senior managers in his firm also paid income tax, 5.08 million yuan last year and 12 million in the first half of this year.

Said Mr Nan: "They included their personal income in that of their factory and their wages were included in the factory's pre-tax expenditure. Personal income tax should be paid. My wages exceed 800 yuan [a month], so I pay. Why do some rich people not pay? This is not normal."

The public debate over payment of taxes is linked to a deeper tussle between modernisers and those who would preserve the status quo in terms of the Party's political hegemony and economic supremacy. Evidently writing from the diehard tendency, China Youth Daily said in an editorial on Friday that it was not enough to investigate tax fraud and evasion.

"Under the current tax and financial system, the opportunities for these are too numerous. When it is discovered, the fines are too light. The standard of our tax management is not high and the government is weakened by its inability to enforce the rules. We must develop a social order in which everyone is equal in the payment of tax," it said.

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