Issuance Date: August 24, 2016 Source: General Office of the State Administration of Taxation
In recent years, the standing committees of the people's congresses and people's governments in all provinces, autonomous regions, municipalities directly under the central government, and cities specifically designated in the state plan have developed and implemented tax protection regulations to provide system guarantees for promoting tax-related information sharing and building a tax assistance and tax protection network participated by society. Incomplete statistics show that nearly half of the provinces across the country had developed and implemented local tax protection regulations as at the end of July.
From state management to state governance
The Program for Deepening the Reform of State and Local Tax Administration System (Program), published in December 2015 by the General Office of the CPC Central Committee and the General Office of the State Council, raises requirements such as a common and standardized information exchange platform and an information sharing mechanism should be established, and efforts should be made to ensure both state and local tax authorities obtain tax-related information from third parties in a timely manner, so as to push forward the shaping of a joint tax governance landscape that "under the leadership of the government and the CPC, tax authorities will play a dominant role, supported by department cooperation, social collaboration and public participation". With this as an opportunity and a motive, the implementation of local tax protection regulations has been noticeably accelerated in various regions since the beginning of this year.
Reportedly, in Shandong, Qingdao, Hainan and Jiangxi, the standing committees of the provincial and municipal people's congress reviewed, deliberated, published and implemented local tax protection regulations. 13 provinces, autonomous regions, municipalities directly under the central government and cities specifically designated in the state plan including Hebei, Liaoning, Jiangsu, Fujian, Henan, Hubei, Hunan, Guangxi, Chongqing, Yunnan, Shaanxi, Ningxia, and Dalian have developed and implemented local tax protection measures. The Measures for Tax Protection in Beijing has been passed and will come into force on September 1. Moreover, provinces and municipalities directly under the central government including Shanghai, Zhejiang and Guangdong are studying their local tax protection measures.
"Tax governance modernization is a key part of state governance modernization." Speaking of the significance of advancing joint tax governance, Zhang Bin, research fellow at the National Academy of Economic Strategy, CASS, said, "governance" means a process that stakeholders that share a common goal cooperate, consult and take joint action. In this sense, the multi-departmental collaborative tax governance mechanism regions are studying is inevitable in modernizing state governance.
According to Hu Yijian, president of the Institute of Public Policy and Governance at Shanghai University of Finance and Economics, transforming from state management to state governance is an icebreaker for deepening reform in all respects in China. This indicates that China's tax collection is being changed from collection by tax authorities to exercise of the tax collection power by taxpayers, and changed to collection by tax authorities and due provision of information for tax collection by enterprises, administrative authorities, public institutions and NGOs to support tax collection.
Rigid system constraints and building a joint governance platform
System constraint is the key to the promotion of local tax protection regulations toward joint tax governance. The local tax protection regulations currently in force all define the responsibilities and rigid constraints for integrated tax governance, taxation assistance and protection, as well as provision of tax-related information, in a bid to solve problems traditionally encountered such as unclear definition of responsibilities and weak cooperation between departments, and also raise requirements such as building an information sharing platform, so as to achieve integrated tax governance.
For example, departments and units such as fiscal, industry and commerce, public security, housing and development, land and resources, finance, state-owned assets, development and reform, audit, judiciary, maritime, and HR and social security should duly assist tax authorities in tax administration of matters within the scope of their responsibilities, providing tax authorities with tax-related information they and relevant units have, such as player qualification, professional qualification, market transactions, and property right registration, according to the Measures for Tax Protection in Yunnan.
The people's governments above the county level should enhance their leadership in tax protection, build the tax protection coordination mechanism, provide financial and technical support, and include tax protection into government performance assessment, according to the Regulations on Tax Protection in Jiangxi.
Tax authorities of the provincial level are required to build and improve the tax-related information platform in Fujian using the Digital Fujian government affairs platform, for the purpose of connectivity and sharing with other relevant departments and the information platforms of districts, cities and counties (cities or districts), according to the Measures for Tax Protection in Fujian.
The people's governments above the county level should build a tax information exchange platform, and establish a leading coordination organization for tax-related information transmission; relevant departments and units should be mobilized for tax-related information connectivity, and relevant departments should be urged to provide and pass on tax-related information through the online government information exchange platform in a timely manner, according to the Measures for Tax Protection in Shaanxi.
Sharing tax-related data for positive impacts of strengthened tax administration
Regulated and restricted by local tax protection regulations, regional tax authorities' efforts to strengthen tax administration through third-parties information have delivered positive results.
The statistics for the first 6 months of this year show that Hebei Provincial Office, SAT and Hebei Local Taxation Bureau acquired 2.003 million pieces of third-party tax-related information and collected RMB 3.75 billion in tax revenues to the Treasury; Jiangsu Provincial Office, SAT and Jiangsu Local Taxation Bureau acquired 90.27 million pieces of third-party tax-related information and collected additional tax revenues of RMB 6.61 billion; Hubei Provincial Office, SAT and Hubei Local Taxation Bureau, more than 50 million pieces, and RMB 580 million in additional tax revenues; Hunan Provincial Office, SAT and Hunan Local Taxation Bureau collected RMB 860 million more in tax revenues using the third-party tax-related information; Shandong local tax authorities collected an additional RMB 4.11 billion in tax revenues using the 1.70 million pieces of third-party tax-related information; Yunnan tax authorities, RMB 66.158 million more in tax revenues by applying the third-party tax-related information acquired; Shaanxi Provincial Office, SAT acquired 29,000 pieces of third-party tax-related information, which contributed an additional RMB 140 million to tax revenues to the Treasury.
According to Hu Yijian, the purposes of the introduction of local tax protection regulations and measures are to enhance cross-departmental assistance and information sharing, and strengthen tax collection capacity and governance in all respects, and consequently ensure tax equality and justice and tax enforcement according to the law.
"Next, relevant authorities should summarize local experiences, and escalate the effective approaches set forth in local tax protection regulations into the state systems and regulations by taking advantage of the revision of the Law of the People's Republic of China on the Administration of Tax Collection, in an attempt to push forward tax governance modernization," said Zhang Bin.