Section IV: The Taxation
Sine 1994, China has practiced a financial system based on separate tax system; and according to the principle of unifying the right of finance and work, it has divided rationally the financial revenue of the central and local administrations. The central government, through the system of tax rebate and transfer payment regulates the financial revenue of various districts. At the same time, two sets of taxation institutions have been set up to carry out separate management.
The above-mentioned taxes are not to be collected from every enterprise, unit or individual. Generally speaking, industrial and commercial enterprises should pay value added tax; communications and transport, construction and installation, financial and insurance, and service enterprises should pay industrial and agricultural taxes; agricultural producers should pay agricultural tax, and profit-making enterprises should pay enterprise income tax. Besides, enterprises producing consumption good that should be taxed should pay consumption tax; mining enterprises should pay resources tax; enterprise engaged in fixed asset investment should pay fixed asset investment orientation regulated tax, enterprises should pay stamp tax for their production, business account and contracts signed with others, and enterprises owing houses and cars should pay housing tax and car use tax. Citizens with an income surpassing a certain limit should pay individual income tax. According to tax regulations, some taxpayers can enjoy tax exemption or reduction.
Among the current taxation laws and administrative regulations published in China, 14 of which can be used on foreign-invested enterprises, foreign enterprises or foreigners, and these include value added tax, consumption tax, business tax, income tax of foreign-invested enterprises and foreign enterprises, individual income tax, resources tax, land value added tax, city housing property tax, car and boat license tax, stamp tax, contract tax, slaughter tax, car and boat license tax, stamp tax, contract tax, slaughter tax, agricultural tax and Customs duty. Apart from the taxes applicable to foreign foreign-invested enterprises, foreign enterprises and foreigners, such as income tax, city housing property tax and car and boat license tax, they pay other taxes the same as the domestic enterprises and Chinese citizens.
Enterprises invested by compatriots from Hong Kong, Macao, Taiwan and overseas Chinese and taxation in relation to them shall be handled in reference to foreign-invested enterprises, foreign enterprises and foreigners.
At the same time, to maintain the State rights and interests, to promote the interest of the investors, and to avoid double taxation and prevent tax evasion, China has signed agreements with 74 countries on avoiding double taxation and tax evasion (till Dec. 31, 2001).