No so-called death tax exists in China

Updated 2016-12-23 09:26:14 Global Times

Corporate levies not comparable with the U.S.: expert

There is no need to exaggerate the level of corporate tax in China, and there is no so-called "death tax" for companies, an expert said, after the State Administration of Taxation (SAT) released several posts concerning the issue.

The Chinese corporate tax rate remains at 25 percent, which is corporate income tax without calculating other levies such as value-added tax (VAT) or land appreciation tax, a professor on taxation who preferred not to be identified, told the Global Times on Thursday.

"It depends on how you calculate corporate tax," he said, noting that once all those other taxes are included, the effective corporate tax rate is higher than 25 percent.

However, there is a difference in the taxation structures of China and the U.S., as the latter levies more individual taxes but fewer corporate ones, the professor noted.

"There is no need to compare China with the U.S. due to this difference," he said.

Discussion about the corporate tax level followed Fuyao Glass Industry Group Co Chairman Cao Dewang's comments about overall taxation for manufacturers in China, which he said is 35 percent higher than in the U.S., media reported on Wednesday.

The so-called "death tax," which prompted some Chinese manufacturers move their production lines overseas, is a term that's "too one-sided," Li Wanfu, director of the Institute of Tax Science, was quoted as saying in a post published on the website of the SAT on Thursday.

"The two biggest taxes that Chinese companies face are VAT and income tax, and the VAT remains at 17 percent or 13 percent," he said.

He also noted that after the VAT reform, more favorable policies include lowering the VAT rates to 11 percent and 6 percent, respectively.

Moreover, the Chinese authorities have taken steps to ease companies' tax burdens. For example, small-scale taxpayers can more easily obtain VAT exemptions if their monthly sales are less than 30,000 yuan (,317), according to the post.

Also, how to evaluate the corporate tax level in China is an open question.

For example "should land taxation be calculated as part of the corporate tax, or should it be considered as a market exchange?" Jiang Zhen, a researcher with the National Academy of Economic Strategy at the Chinese Academy of Social Sciences, told the Global Times on Thursday.

Including VAT reform, the total tax reduction this year is expected to reach 500 billion yuan, according to the Ministry of Finance.

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