China’s Tax Revenue Grows 9%

January 18, 2010 Taxation in China

Chinese Embassy SealTax revenues collected in the People’s Republic of China rose by 9.1 percent in 2009 compared to the previous year.

In a statement published by the Chinese State Administration of Taxation on January 15th the department declared that the country’s tax revenues had risen by CNY524.1 billion in 2009, bringing the collections to CNY6.31 trillion (approx. USD928). The tax revenues growth exceeded Chinese Government set targets by 1.1 percent after an unexpected economic resurgence in June.

Domestic retail sales revenue showed the largest percentage rise in 2009, reaching CNY476.1 billion, 85.4 percent higher than 2008. The increase came as a result of government policies aimed at encouraging domestic consumption. Value-Added Tax (VAT), the largest single contributor to tax revenues, rose by 3.8 percent to CNY1.88 trillion. Automobile purchase tax rose by 17.6 percent to CNY116.4 million, following a 46.15 percent increase in auto purchases. The Chinese car market, which reached 13.64 million sales in 2009, has become the largest in the world. Personal Income taxes rose by 5.9 percent to CNY394.4 billion. Corporate Income Tax collections for 2009 fell by 0.3 percent to CNY1.22 trillion. Stamp duties on securities transactions dropped by 47.9 percent to CNY51.4 billion.

In the face of falling international consumer demand the Chinese Government instated a series of tax cuts and incentive programs to boost the national economy. As these temporary cuts and programs are due to expire, tax collections are expected to experience further rises.

Photo by matthewbradley