China orders crackdown on tax evasion
Chinese government has ordered a crackdown on alleged personal income tax evasion by entertainers, athletes and executives in highly profitable industries such as telecommunications, the Associated Press reported.
An announcement seen Wednesday on the State Administration of Taxation's Web site said stepped-up checks on high-income earners were part of a new push to make tax collection more systematic and comprehensive.
Foreign entertainers who perform in China are also targets, along with private investors, those working for multinational and foreign-invested companies and in fields including finance, insurance, securities, tobacco, petrochemical and civil aviation.
"Select a certain number of people from among those who have more potential impact on tax collection and carry out rolling audits," said the administration in its instructions to tax collectors.
The orders follow a decision last month to cut income taxes on China's poorest workers amid concerns that a growing gap between rich and poor could fuel unrest.
With its economy growing at around 9 percent a year, China collected 173.7 billion yuan (US$21.4 billion;euro17.61 billion) in personal income taxes last year, up from 41.4 billion (US$5.1 billion;euro4.2 billion) in 1999.
Yet authorities believe thousands of Chinese get away with paying far less than they should, while income disparity continues to grow.
To help those on the lower end of the pay spectrum, a draft amendment to China's tax law calls for those making less than 1,500 yuan a month (US$185; euro151) to be exempt, up from the previous cutoff point of 800 yuan (US$98; euro80).
An earlier crackdown against high-profile tax cheats, launched in 2002, snared thousands of professionals and entrepreneurs and resulted in several prosecutions, including that of well-known actress Liu Xiaoqing.
Although not charged with any crime, Liu was detained for more than a year. State media heavily publicized her case in an attempt to assure China's public that the government was fighting suspected abuses by society's elite.
Liu reportedly paid more than 16 million yuan (about US$2 million) in back taxes to ensure her release -- an enormous bill in a society where annual incomes average only about US$1,000 (euro822) per person. Liu's manager was later sentenced to three years in prison for tax evasion.
China's tax system has vastly improved in recent years.