According to the rules of the State Council on revenue sharing system, the tax revenue in China may divided into Central tax revenue, local tax revenue and the tax revenue shared between the Central and local governments.
(1) Central tax revenue: domestic Consumption Tax; Customs Duties; VAT and Consumption Tax collected by the Customs on behalf.
(2) Local tax revenue: Individual Income Tax; City and Township Land Use Tax; Farmland Occupation Tax; Fixed Assets Investment Orientation Regulation Tax; Land Appreciation Tax; House Property Tax; Urban Real Estate Tax; Inheritance Tax (not yet legislated); Vehicle and Vessel Usage Tax; Vehicle and Vessel Usage License Plate Tax; Deed Tax; Slaughter Tax; Banquet Tax; Agriculture Tax and Animal Husbandry Tax and their local surtaxes.
Tax revenue shared between the Central and local governments:
a. Domestic VAT: 75% for Central Government and 25% for Local Governments;
b. Business Tax: the part consolidated paid by the railway department, the headquarters of various banks and the headquarters of various insurance companies, and the additional 3% Business Tax paid by financial and insurance enterprises Resource Tax belong to the Central Government; and the rest is assigned to the local governments;
c. Enterprise Income Tax: income tax paid by Central enterprises, income tax paid by local banks and non-bank financial institutions, and the part consolidated paid by the railway department, the headquarters of various banks and the headquarters of various insurance companies belong to the Central Government; and the rest for local governments;
d. Income Tax on enterprises with foreign investment and foreign enterprises: the income tax paid by foreign funded Banks belongs to the Central Government, and others for local governments;
e. Resource Tax: the part for the Central Government is the tax paid by offshore oil enterprises, and the rest is for the local governments;
f. City Maintenance and Construction Tax: the part consolidated paid by the railway department, the headquarters of various banks and the headquarters of various insurance companies belong to the Central Government; and the rest to the local governments;
g. Stamp Tax: 88% of the Stamp Tax revenue collected on stock transactions for the Central Government; the remaining 12% for the local governments; and
h. Security Exchange Tax (not yet legislated and levied).
Appendix 1: China’s Current Tax System
China’s Current Tax System
|Category of Taxes||Type of Taxes|
|Income Taxes||Enterprise Income Tax|
|Income Tax on Enterprises with Foreign Investment and Foreign Enterprise|
|Individual Income Tax|
|Resource Taxes||Resource Tax|
|Urban and Township Land Use Tax|
|Special Purpose Taxes||City Maintenance and Construction Tax|
|Farmland Occupation Tax|
|Fixed Assets Investment Orientation Regulation Tax|
|Land Appreciation Tax|
|Property Taxes||House Property Tax|
|City Real Estate Tax|
|Behavioural Taxes||Vehicle and Vessel Usage Tax|
|Vehicle and Vessel Usage Plate Tax|
|Security Exchange Tax|
|Agriculture Taxes||Agriculture Tax|
|Animal Husbandry Tax|
|Customs Duties||Customs Duties|
1. Slaughter Tax, Banquet Tax and Animal Husbandry Tax are now decentralized to the local governments for administration. Whether levying or not shall be at the discretion of the governments at provincial level for decision by taking into account the local conditions.
2. Inheritance Tax and Security Exchange Tax have not yet legislated to date.