Chinese corporate tax is the 12th in the world? Official response: just false high

Glass King and Chairman of Fuyao Glass Group Cao Dewang recently accepted the first financial interview and said that when the cost of manufacturing is high, China’s tax burden is much higher than that of the United States.
What is the level of Chinese corporate tax burden in the world? According to the latest ranking of the World Bank, China's total tax rate is as high as 68%, ranking 12th in the world. In this regard, the opinions of various parties are different. However, it is an indisputable fact that the overall tax burden of Chinese enterprises is heavy.

China's total tax rate is artificially high?
Recently, the World Bank and PricewaterhouseCoopers issued a report on the global corporate tax burden (hereinafter referred to as the “Report”), which counted the total tax rate of 190 countries and regions reflecting the corporate tax burden burden, and all countries in 2016. The (regional) average tax rate is 40.6%, while China's total tax rate is 68%, far above the average, ranking 12th in the world.
Countries with a total tax rate in front of China are mainly from less developed countries in Africa and South America. For example, the world with the highest total tax rate is the Comoros of the Comoros in Africa, with a total tax rate of 216.5% and the total Brazilian tax rate in South America. 68.4%, slightly higher than China.
The total tax rate of major developed countries is also significantly lower than that of China. For example, the German total tax rate is 48.9%, the total US tax rate is 44%, and the total UK tax rate is 30.9%. However, the BRA's total tax rate is not the highest in China. For example, Brazil is higher than China, India's total tax rate is also 60.6%, and Russia's total tax rate is 47.4%.
According to the report, the total tax rate refers to the proportion of the company's tax payment to commercial profits, including profit tax, labor tax and other taxes.
A financial and taxation expert who asked not to be named told the First Financial Reporter that from the World Bank's indicator, they believe that the Chinese company's tax burden is ranked 12th in the world.
However, Chinese officials do not agree with this indicator and believe that China's total tax rate is artificially high.
Li Wanzhen, director of the Taxation Research Institute of the State Administration of Taxation, recently wrote that Chinese companies have undertaken more than 90% of various taxes and fees, while individuals account for less than 10% of all taxes and fees. However, because China's tax system is mainly based on turnover tax, turnover tax (such as value-added tax) accounts for about two-thirds of China's tax revenue. Since the turnover tax is attached to the price, the enterprise can realize the transfer because of the influence of market supply and demand. The taxpayer is separated from the taxpayer, and the enterprise only fulfills the tax payment obligation, which is not the burden. The tax structure with the turnover tax as the main body will result in a corporate tax burden calculated according to the “total tax rate” index published by the World Bank.
To put it simply, although the total tax rate announced by the World Bank reflecting the burden of corporate taxes and fees is as high as 68%, in fact, some of the tax burden enterprises can be passed on to the ordinary consumers or the downstream of the industrial chain. The actual tax burden of enterprises is not so large. Therefore, the virtual height.
Some scholars have expressed different opinions on this statement.
Li Shuguang, chief professor of finance at Tianjin University of Finance and Economics, told the First Financial Reporter that the World Bank’s total tax rate has been published for ten years. According to the Chinese saying, the commercial profit tax rate is mainly derived from corporate income tax, social insurance fees and other taxes. Including the turnover tax that can be passed on, that is to say, the tax burden here is theoretically the tax that the enterprise actually bears. Therefore, the total tax rate of 68% does not have a false high. Considering that the tax deduction of Chinese enterprises is insufficient, there are even There may be an underestimation.
According to the report, China's total tax rate is 68%, of which the profit tax rate is 10.8%, the labor tax rate is 48.8%, and other tax rates are 8.4%.
Zheng Chunrong, deputy dean of the Institute of Public Policy and Governance at Shanghai University of Finance and Economics, told the First Financial Reporter that the analysis method of the total tax rate indicator is not scientific. The labor tax rate actually refers to the ratio of social insurance contributions to corporate profits. In the total tax rate of 68%, China's labor tax rate is as high as 48.8%. This shows that the social insurance contribution burden is very heavy, and on the other hand, the social security benefits are high. The protection is great. On the other hand, in some developing countries, because the national basic old-age medical insurance is not available, of course, the labor tax rate is low.
Li Shuguang believes that although China's social security five insurances and one gold (endowment insurance, medical insurance, unemployment insurance, industrial injury insurance and maternity insurance and housing provident fund) are treated as employee benefits, it affects the current profits of the enterprise, which is essentially one. Kind of tax.
Zheng Chunrong also said that at present, China's maternity insurance, industrial injury insurance and unemployment insurance funds have a large balance, and objectively should lower the rate, and the government is doing this in the past two years.

High macro tax burden
Although the global ranking of Chinese corporate taxation has different views on 12 parties, there is no controversy about the current burden of corporate taxes and fees.
Domestic macro tax burden is often used as an important indicator to judge the burden of corporate taxes and fees. In the past 20 years, the scale of the government has continued to expand, and the provision of public services has continued to increase. China’s macro tax burden has been rising all the way, and it has stabilized at around 29% in recent years under the tax reduction and fee reduction measures.
The Central Political Bureau meeting on July 26 this year proposed for the first time to reduce the macro tax burden. This is a major decision-making deployment, because the Third Plenary Session of the 18th CPC Central Committee proposed "stable tax burden." The Central Economic Work Conference held recently recently re-emphasized tax cuts and fee reductions when deploying economic work in 2017. In terms of cost reduction, efforts should be made to reduce taxes, reduce fees, and reduce factor costs.
Liu Shangxi, dean of the China Academy of Fiscal Science, told the media recently that the Central Economic Work Conference has clearly confirmed that the tax will be further reduced in the future, which is equivalent to a reassurance. As for how to reduce specific taxes and which taxes are to be reduced, we must wait for specific policies, which requires comprehensive trade-offs. In the long run, tax cuts are still necessary, but relatively easy. In fact, it is more important and more difficult to promote economic and social reforms. This is the fundamental way to reduce the burden on enterprises.
“We found through investigation that the system and mechanism are not smooth, which is an important reason for the high cost of enterprises. For example, the current overcapacity of China’s power generation enterprises is idle, but at the same time, the cost of electricity for enterprises is high, in fact, both sides have reduced. The demand for electricity prices, but the current power system has made this problem difficult to solve in the long run. For another example, some companies complain that China’s borrowing costs are high, and the fundamental reason is that the financial system reform is not in place, causing a disconnect between finance and the real economy – now China is not short of money. On the contrary, the capital is relatively surplus. A lot of money has only been circled in the financial system, that is, the saying "money makes money"." Liu Shangxi said.

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