OECD Taxation Working Papers

ISSN :
2223-5558 (online)
DOI :
10.1787/22235558
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Working papers from the Centre for Tax Policy and Administration of the OECD that cover the full range of the Centre’s work on taxation with the main focus on tax policy related issues.
 

Tax Policy and Tax Reform in the People's Republic of China You or your institution have access to this content

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Author(s):
Bert Brys1, Stephen Matthews1, Richard Herd1, Xiao Wang1
Author Affiliations
  • 1: OECD, France

Publication Date
04 Sep 2013
Bibliographic information
No.:
18
Pages
64
DOI
10.1787/5k40l4dlmnzw-en

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This paper compares the tax system in China with the tax system in OECD countries and the tax reforms China and OECD countries have implemented in the past. The analysis focuses on those taxes and tax issues which are currently on China’s reform agenda, including the consumption taxes (especially the integration of the "business tax" into the VAT), environmentally-related taxes, the personal income tax, fiscal relations between the central and sub-central levels of government and property taxes. The paper provides a (preliminary) analysis of the tax-to-GDP ratio and the tax mix in China as well as the average and marginal tax wedge on labour income, by applying the OECD’s Revenue Statistics and Taxing Wages methodology. Although a country’s culture, traditions and legal system play an important part in shaping its tax regime and how it can be reformed, the paper also reviews the general design issues on how to make the tax system in China more growth-friendly, simple and transparent, less distortive and fairer. The paper contains a detailed discussion and evaluation of each tax and considers possible directions for future tax reform in China.
Keywords:
tax reform, China, tax policy
JEL Classification:
  • H2: Public Economics / Taxation, Subsidies, and Revenue
  • H7: Public Economics / State and Local Government; Intergovernmental Relations