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Duan Bingde

Tax Burden on China’s Enterprises: Viewing from Four Dimensions



By Duan Bingde, DRC


Different views on tax burden of China’s enterprises can be illustrated respectively from the perspectives of macro-tax burden, industrial tax burden, tax structure and the comprehensive tax burden of enterprises.

First, the marco-tax burden in China is roughly at the modest level in the world. From 2012 to 2015, the average government’s tax revenue accounted for about 18.33% of total GDP; and fiscal revenue accounted for 21.46%. The government budgetary revenue is composed of general public budget, state-owned capital management budget, social security funds and local government funds. From 2012 to 2015, after removing overlapping parts, these budgetary revenues accounted for about 30% of total GDP.

Second, in light of tax structure, China mainly implements an indirect-tax-oriented tax system, and the actual tax burden of enterprises is susceptible to market supply and demand changes. In 2015, the proportions of value-added tax, consumption tax and business tax in the total tax income were 24.9%, 8.4%, 15.5% respectively with individual income tax only accounting for 6.9%.

Third, in terms of industrial tax burden, the tax burden of manufacturing enterprises is relatively high. From 2010 to 2014, the average proportion of tax income collected from secondary industry stood at 49.52%, that of tertiary industry 50.36% and primary industry 0.12%.

Fourth, viewing from the tax burden of enterprises, the index relating to enterprises’ awareness of tax burden is relatively high. The statutory tax burden and tax rate are not high as some of the tax burden are passed on to customers and the implicit tax burden in some areas is comparatively heavy when it comes to actual expenditure.

Fifth, comprehensive policies should be carried out to effectively reduce enterprises’ tax burden. The tax structure should be further optimized, and individual income tax with income distribution at the core should be reformed; the tax burden of manufacturing enterprises should be moderately reduced; the service-oriented government transformation should be accelerated, and efforts should be made to reduce the implicit tax burden of enterprises, improve information disclosure, enhance the efficiency of tax collection and administration and lower the costs of tax collection and administration .


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