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Hot Topics
 

◇ The Blueprint for Deepening the Reform of Tax Collection and Administrative Systems of State and Local Tax Administrations
◇ Delivering on the "Belt and Road" Initiative
◇ "Internet+Tax" Action Plan
◇ Upgraded VAT Invoice Processing System


The year of 2015 was marked by several significant China tax highlights: The release of The Blueprint for Deepening Reform of Tax Collection and Administrative Systems of State and Local Tax Administrations announced the commencement of tax administration reinvention; Tax administrations have adopted a series of important measures to serve the purpose of the "Belt and Road" Initiative; The "Internet+ Tax" Action Plan put forward the goal of minimizing compliance burden as a smarter SAT; VAT Invoice Processing System was upgraded comprehensively and thereby the administrative efficiency was enhanced enormously.


The Blueprint for Deepening the Reform of Tax Collection and Administrative Systems of State and Local Tax Administrations
The Blueprint for Deepening Reform of Tax Collection and Administrative Systems of State and Local Tax Administrations (hereafter referred as "The Blueprint") was released in October 2015 to encourage the collaboration between the state and local tax administrations and to promote voluntary compliance by improving taxpayers' satisfaction. The Blueprint is a vision for the future, whereby state and local tax administrations make the most of their comparative advantages to leverage cuttingedge technologies, to minimize compliance burdens, and to interact seamlessly with taxpayers in an efficient manner. Key tasks are:
Clarifying responsibilities.
Central taxes are collected by state tax administrations, while local taxes are collected by local tax administrations. Which level of tax authorities should take the responsibility of the administration of shared taxes is determined by the nature of taxes and the principle of tax collection convenience. The responsibility of local tax administrations in respect to administrative fees and local funds etc. was clearly defined.
Expanding innovative service channels. The SAT:
◆ worked on better service delivery standards;
◆ helped taxpayers to self-manage their tax affairs;

◆ provided cross-agency services on a regular basis;
◆ established a tax payment records system;
◆ improved dispute resolution mechanisms.
Transformation of administrative approaches. The SAT:
◆ further strengthened both contemporaneous and follow-up tax administration;
◆ arranged tax matters on a taxpayer-segmented basis;
◆ centralized large taxpayer management;
◆ introduced a tax administration system targeted at natural persons;
◆ deepened the reform of the tax inspection regime;
◆ promoted the use of e-invoices;
◆ accelerated the setup of tax information systems;
◆ harnessed tax big data for national governance purposes.
Deepening of international tax collaboration
By proactively participating in the international tax arena, the SAT determined to crack down on tax avoidance and tax evasion on an enhanced collaborative basis with other countries. Besides, the SAT responded to national development strategies and fulfilled its tasks to provide tailored services to outbound Chinese investors.

Optimizing personnel regime
To encourage the honest performance throughout the entire workforce, the SAT strengthened the leadership of the Communist Party of China and further clarified the responsibilities of tax administrations at each level by combating corruption and building a transparent government under strict investigation and oversight mechanisms. Seconding tax officials and arranging learning and development programs allowed the SAT to maintain a workforce with high performance.
Exploring innovative external channels
The SAT engaged with other stakeholders in terms of information sharing, crossagency collaboration, judicial protection of taxation and policy outreach programs.


Delivering on the "Belt and Road" Initiative
China is implementing the Silk Road Economic Belt and the 21st-Century Maritime Silk Road Initiative (hereinafter referred to as the "Belt and Road" Initiative,or B&R). In response to this Initiative, the SAT introduced a series of taxation programs, including:
◆ Expanding the tax treaty network in line with B&R. The SAT renewed or signed tax treaties with Cambodia, Russia, Italy, Spain, India, Pakistan and Romania in 2015. Tax administrations at all levels provided timely assistance to domestic enterprises to solve tax-related disputes with B&R countries according to the Mutual Agreement Procedure.
◆ Carrying out extensive research on tax systems of 95 jurisdictions including all B&R countries and major Chinese outbound investment countries. Some key outcomes of these researches included the publication of Investment Guidelines on Tax Issues of US, Mongolia and China Hong Kong respectively.
◆ Initiating B&R tax service delivery via various channels, e.g. official websites,telephone inquiries (hotline number: 12366), field visits (to 800 enterprises) and outreach programs (a total of 200 for 20,000 enterprises).
◆ Providing two sessions of training program on the topic of "Tax Administration & Taxpayer Service" to tax officials from developing countries, including Mongolia, Iraq, Sri Lanka, Armenia, Bhutan, Moldova and Egypt.


"Internet+Tax" Action Plan
In September 2015, the SAT introduced the "Internet+ Tax" Action Plan with the vision to further reduce the compliance burden through providing comprehensive e-services as a smarter tax authority by the year of 2020. This plan, being taxpayeroriented,is designed to establish an e-tax authority, which provides seamless online and in-person services with enhanced standards and efficiency. Specific tasks of this Plan are summarized in Table 1.
Within three months of introduction of "Internet+Tax" Action Plan, the SAT rolled out the first pilot program in 17 provinces to promote use of the invoice online verification system to establish a nationally unified invoice verification system. Furthermore, some tax administrations has managed to operate a holistic "Internet+Tax" framework, while others promoted some highlighted tasks accordingly by the end of 2015.



Upgraded VAT Invoice Processing System
In 2015, the Chinese tax authorities rollout out a new VAT Invoice Processing System ( Figure 2 ). This covered VAT invoices printed by all general VAT payers and small scale VAT payers above a given threshold. To detect non-compliance and corruption risks concerning VAT invoices, this new VAT Invoice Processing System processes and cross-checks the invoice data (excluding small-scale taxpayers below VAT thresh-hold) in a real-time fashion. The whole automatic operation starts when taxpayers with digital certificates issue a VAT invoice, the data of which are encrypted and automatically uploaded to the upgraded data system.


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