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Business / Policy Watch

Tax law draft closes public consultation

By Dai Tian (chinadaily.com.cn) Updated: 2015-02-04 15:49

According to the draft, individual taxpayers will get a permanent taxpayer identification number that they will have to provide when signing contracts, paying social insurance premiums or registering real estate.

Unlike most developed economies, which routinely issue such numbers to individuals, China issues TINs only to enterprises.

"This is a major step. An important goal of the amendment is shift to a direct tax-based system, with a focus on individual income tax and property tax," said Liu Jianwen, head of the Fiscal and Economic Law Research Center at Peking University.

Liu said that the TIN would lay the technical foundation for the collection of personal income tax and property tax.

Economists have called for years establishing a system more focused on direct taxes, which they argue will do more to facilitate income redistribution. China now collects more than 60 percent of its tax from indirect levies including sales tax, value-added tax and consumption tax.

As these taxes are collected from enterprises, individuals lack the sense of being a "taxpayer" that their Western counterparts have. They also lack awareness of corresponding "taxpayer rights", experts said.

"Ordinary Chinese will be dealing with tax authorities much more frequently. In the process, they will care more about how their money is spent and their rights as taxpayers are guaranteed," said Liu.

The draft also stipulates that e-commerce companies must post their tax registration information on their Internet pages. E-commerce platforms are also required to submit operators' information to the tax authorities.

Experts said these points indicated that small business owners on various e-commerce platforms would be subject to taxes.

A spokesman for Alibaba Group Holding Ltd said that at present, operators on its Tmall platform, which features established brands, pay taxes according to local regulations.

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