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Interaction between Tax Authorities and Enterprises: Improve Tax-based Business Environment and Boost High-quality Economic Development

Issuance Date: April 4, 2018    Source: Xinhua News Agency

This April is the 27th National Tax Awareness Month. The State Administration of Taxation (“SAT”) organized a seminar with theme of “improving tax-based business environment and boosting high-quality economic development” between tax authorities and enterprises. Ten entrepreneurs from different industries got together in Beijing to offer suggestions for promoting the high-quality economic development through tax service.

Tax support as the guarantee for enterprise development

“Six undergraduates, including me, chose to start our own business in 1999. It’s a really hard time.” Liu Qingfeng, Chairman of iFLY TEK, reviewed his hardships during their start-up period. His words were echoed by the entrepreneurs present.

“The company has grown from a start-up to a listed company with the world’s best intelligent speech and language technologies. In fact, tax cut played a significant role in this process.” Liu sighed. “In 2017 alone, the tax exemption and reduction policy saved us a total amount of about RMB 48.75 million.”

The tax authorities has strictly implemented all the preferential tax policies, which meant an annual tax reduction by more than RMB 380 billion in 2017.

Yu Ming, Chairman of Shandong Melinda Quantum New Energy Co., Ltd., said that “the preferential tax treatment and the enterprise’ innovation-oriented investment are mutually supportive. Our company will continue to invest more in scientific and research work this year. It’s expected that a single item like the enterprise’s super-deduction of R&D expenses can achieve the preferential tax treatment of more than RMB 3 million, implying about 100% increase when compared to over RMB 1.5 million last year. In this context, our company boasts a more dynamic growth momentum.”

The preferential tax policies for the companies with foreign investment can help these companies not only explore foreign market, but secure market presence and develop along a fast track.

“For a company to find its way into the foreign market, strange tax system and tax management model proves to be harsh challenge,” Zhang Huarong, Chairman of Huajian Group, said.

“Tax convention is the “amulet” for the companies to explore the overseas market,” Zhang said. Thanks to tax convention, the preferential tax rate available for Huajiang Group declined from 10% to 5% in Ethiopia, which means an annual tax reduction by half a million dollars.

Promoting company transformation and upgrading with tax, and smarter tax with company innovation

“Many enterprises we see today are all what we provide services for.” China Telecom’s General Manager Liu Aili said that “after business tax is replaced by value-added tax, the basic telecom service and value-added service are subject respectively to the VAT differentiated tax rate of 11% and 6%. With the tax’s leverage effects, China Telecom actively transforms to digital business and value-added business when the traditional information business is development, to achieve a rapid growth in such emerging operations as mobile payment and Internet of Things.”

Sense of gain made possible by the optimized tax service

The short tax service time and the simple formalities are all the entrepreneurs’ hope for tax service.

When talking about tax declaration, Deloitte China’s Vice CEO Jiang Yin said that “it took only ten minutes to complete our online tax declaration for 2017 on my way to this meeting.” Over a period of five years, Deloitte has witnessed a declining tax burden for Chinese enterprises when the tax-related services are provided for them.

“According to Paying Taxes 2018, the ‘tax payment time’ index was shortened by 52 hours in 2016 when compared to the year before. This positive change is closely related to the SAT’s convenient tax payment measures,” PWC’s Mainland and Hong Kong Tax Partner Wu Jiayu said.

Information-based taxation service offers more convenience to taxpayers

According to the SAT’s “Internet + Tax” action plan, Qingdao Provincial Office, SAT and Haier Group co-built the “Intelligent Tax Project”, a platform between tax authorities and enterprises.

“The platform of ‘Intelligent Tax Project’ has achieved the seamless data connection between Haier Group’s ERP system and the tax department’s online tax service system, shortened the tax declaration time from half a day to ten minutes, reduced the tax declaration employees from 39 people to five people. The company can cut financial cost by over RMB 30 million.” Haier Group’s President Zhou Yunjie said.

The e-invoices introduced by tax authorities during the recent years have received positive responses from enterprises. “The SAT’s Shenzhen Bao’an District Office actively provides us with the e-invoice services. Now an electronic invoice can be printed only by scanning codes to largely reduce the courier’s dispatching burden,” SF Express’s CFO Wu Weiting said.’s CEO Zhu Mingyue introduced the well-tailored tax withholding system developed by the tax department. “Enterprises are buyers and individuals are sellers on our platform. After Chongqing’s tax authorities learned something about our situations, they designed the tax withholding system to address our problems. Now we can complete online invoice issuance, tax collection and payment online through this system. Our problems are thoroughly solved,” Zhu Mingyue said. Since 2014, this system has directly reduced all the costs by more than RMB 200,000, including postage.

Tax reform further deepened

“I visited Hainan Island again this year to find that there’re some earth-shaking changes there. I went there for the first time when I started to “go into business” in 1989. These changes deeply impressed people like us, the earliest businessmen who have experienced the development process of market economy.” Pan Shiyi, Chairman of SOHO China Co., Ltd. said. “The acceleration of urban modernization process is closely related to the economic development. The economic take-off would be impossible without vigorous supports from tax authorities. For an enterprise, tax payment according to law is its obligation to the country and the society.” His words were echoed by other entrepreneurs in their nodding.

According to the SAT’s Administrator Wang Jun, the data on VAT invoices show that the industry posted a year-on-year increase of 17.6% in sales in January and February, up by 7.8 percentage points from last December; the sales of service sector increased by 24.3% YoY, up 13.5 percentage points from the level in December 2017; the sales of new growth drivers industry and especially high-tech manufacturing and equipment manufacturing grew by 12.3%, 4.7 percentage points higher than in December 2017; the sales of new growth drivers service sector developed at a high rate of 50.1%, higher than 22.7 percentage points in December 2017. These data all reveal the strong driver behind the corporate development.

Wang said that the tax authorities will persistently deepen tax reform, earnestly carry out preferential tax policy, constantly enhance quality and result of tax payment service, and cultivated tax sources. For the reform of tax institutions, Wang said that the tax authorities will such a tax reform as the merger between state and local tax authorities will be properly implemented. Anyway, it’s a reform task that benefits country, people, enterprises and tax.

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