Chinese film actress Liu Xiaoqing, once described as
a "billionaire", was recently arrested on charges
of dodging taxes -- another example of the problem of tax
evasion by the rich.
to comments in the domestic media, China has made big
strides forward in rectifying the market economic order by
prosecuting celebrities for tax evasion.
Tax avoidance has become one
of the social "cancers" of China. Though a group
of well-known enterprises, including the Legend Computer
Group and the Bank of China, were recently cited as examples
of upfront taxpayers, there were at least 200,000
enterprises in Beijing whose employees paid no individual
income tax last year, an official from the municipal
taxation department has disclosed.
The evasion of enormous
amounts of personal income tax has done great harm to the
country's economy. China has always tried to create a sound
social environment which honors the honest payment of taxes
and has set up new management systems for levying taxes.
Beijing Municipality, and
Zhejiang and Guangdong provinces, famous as "cradles of
the wealthy", have all improved their management of the
collection of individual income taxes.
Beijing municipal taxation
bureau will begin to monitor individuals with annual
salaries exceeding 100,000 yuan (12,000 US dollars) in over
300,000 enterprises from October this year.
In addition, the 100
highest-paid people in each district or county will be
listed as the key individuals under supervision, including
many film or TV stars, CEOs of high-tech companies and
bosses of private enterprises.
self-employed and private business owners, Zhejiang taxation
department is planning to cooperate with local sectors of
business administration, public security, banking and
traffic control, in a bid to prevent tax dodging by the rich
by closely scrutinizing their personal assets.
Last year, Zhejiang conducted
spot-checks on over 23,000 private enterprises, retrieving
individual income tax of 950 million yuan (115 million US
Tax evasion by the
wealthy has evoked intense discussion in private business
circles in Wenzhou City of Zhejiang.
Nan Cunhui, board chairman of
Zhengtai Group, demanded a detailed accounting of his
company's tax payments in the last two years and encouraged
senior managers and shareholders to be aware of regulations
concerning the levy of personal income tax.
Wang Jianyi, board chairman of
Hangzhou Futong Group in the provincial capital, said,
"An enterprise should shoulder social responsibilities
actively for its long-term development."
Wang has persisted in paying
individual income tax in line with the state's standards
since establishing his company. Among the 120 million yuan
of taxes paid by Futong in 2001, about 6.5 million yuan was
in personal income tax.
China's Guangdong Province is setting up a sound tax
monitoring system based on computer networks with a total
investment of 500 million yuan (60.5 million US dollars).
Special files will be kept on high-paid individuals engaged
in financing, aviation, entertainment as well as senior
business managers. The provincial capital Guangzhou has also
included more than 7,000 wealthy people in the primary
from the State Administration of Taxation show that
individual income tax revenue approached 99.6 billion yuan
(12 billion US dollars) and was China's fourth largest
category of tax last year. However, personal income tax only
accounted for 6.6 percent of the whole tax revenue, far less
than that of many countries with a lower income level.
Experts believe that the
newly-launched taxation measures as well as continuously
improved laws and regulations concerning tax levying will
gradually overcome the widespread evasion of personal income
tax. More and more attention will be paid to this tax
category as it stands for basic personal credibility in