New Developments to China’s Tax Policy

December 29, 2010 Taxation in China

Pantalla China / Chinese LanternThe Finance Minister of China has revealed the country’s fiscal policy intentions for the upcoming year, saying that the Government will focus its tax system development efforts on improving national income distributions and aiding low-income areas across the country.

On December 27th the Finance Minister of China Xie Xuren spoke at the National Financial Work Conference which took place in Beijing, explaining the Government’s fiscal policy outlook for the 2011 year. He stated that a set of proactive policies will be implemented in response to the changing international economic environment and its effect on the population of China. He added that the Government’s policy intentions are also aimed at promoting sustainable and strong economic growth in China.

The Finance Minister summarized the Government’s policy intentions into several primary goals, the first of which is to increase the consumer spending power and incomes of rural workers and low-income individuals across the country. The Government will pay particular attention to improving the economic conditions for taxpayers in the lowest earning rural areas of the country. The Minister indicated that the intended improvement will be carried out in a two-fold manner, with some policies aimed at diverting fiscal resources to low developed regions, while concurrently guiding consumer spending practices of low-income earners.

The Government intends to carryout policy adjustments to improve incentives for public investment into the local businesses. It is believed that stimulating higher levels of entrepreneurial financing through private investment will address and circumvent weaknesses in the national business credit system.

Xie Xuren revealed that in 2011 tax changes will concentrate on providing improvements to China’s three poorest rural areas, although positive effects will be felt across the entire country. It is hoped that by the end of the year, there will be fundamental transformations to the support structures available for lesser developed regions.

The Finance Minister also claimed that the Government will ramp up its policy focus on supporting research and development projects, and increase investment into technological innovations. It is envisioned that tax policy changes will improve support for rural energy-conservation projects, speed up the development of ecological repair and compensation methods, and promote resources conservation initiatives. These policies will also be targeted and augmented for each area where they are implemented, to ensure ideal regional development.

Photo by Nimmue