Healthy Economic Growth Boosts Chinese Tax Collection

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

22 October 2003

Figures recently released by the State Administration of Taxation show that the Chinese government has had a bumper year in terms of tax revenue, with receipts up nearly 22% in the first nine months of 2003 compared with the corresponding period last year.

Officials have put the growth in revenues down to a robust economic performance this year, which has seen the economy expand by 8.5% in the first nine months according to the National Bureau of Statistics. Improved methods of tax collection have also been cited as a factor.

Reports have shown that the increase in revenues came from three main sources: value added tax (VAT) revenues which rose 19.7% to top 542.6 billion yuan ($65.4 billion) in the period in question; import tariff income, increasing 51.8% to 206.1 billion yuan ($24.8 billion); and domestic company income tax which leapt 27.1% to 180.1 billion yuan ($21.7 billion). These three areas contributed about 70% of the overall increase in revenues, the government revealed.

Tax experts expect the growth in tax revenues to continue next year, buoyed by expectations of increased foreign direct investment, higher rates of consumption, and increases in general economic efficiency.

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