China Sees Huge Revenue Boost

February 15, 2012 Taxation in China

Tax Revenues Grow by 22.6 Percent in ChinaBEIJING – China collected over RMB 1.6 trillion more in taxes over 2011 than in 2010, with the growth being attributed to rising personal incomes and the continued expansion of the national economy.

According to a new report released by the Ministry of Finance of China on February 14th, the country’s tax revenues jumped by 1.6 trillion, equivalent to 22.6 percent, in 2011, reaching a cumulative amount in excess of over RMB 8.97 trillion. Throughout the year the tax revenues grew at approximately the same rate as in 2010, and the Ministry explained the consistent growth as a result of the country’s stable economic expansion and the continually improving performance of businesses across the country.

Collections of corporate income taxes accounted for nearly 18.7 percent of all tax revenues collected in 2011 in China, bringing in a total of RMB 1.68 trillion. According to the Ministry, collections of corporate taxes rose by 30.5 percent in 2011, compared to 2010.

Collections of value added tax grew by 15 percent to a total of RNB 2.43 trillion, and revenues from collection of turnover taxes rose by 22.6 percent to RMB 1.37 billion.

Collection of personal income taxes grew by 25.2 percent in 2011, with the growth being explained by the continually increasing levels of personal incomes in China.

The rise in tax revenues has also been attributed to the government’s efforts to ensure that high income earners in China remain compliant with their tax liabilities. The Ministry also praised the widespread improvements in the administration and efficiency of tax authorities in the country.

In the first quarter of 2011 tax revenues grew by 32.4 percent, and the rate of revenue growth decreased to 27.2 percent in the second quarter, followed by 22.6 percent in the third quarter, and 6.8 percent in the fourth quarter. The Ministry explained the slowdown, saying that it can be directly attributed to the government’s concentrated efforts to reduce the tax burdens faced by taxpayers across the country, along with a slight decrease in activity in the automotive industry and housing market.

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