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China’s tax burden below world average: official

Updated: Jan 17,2017 10:45 AM     Xinhua

BEIJING — An official said on Jan 16 that China’s macro tax burden had been lower than the world average for the past few years, responding to a recent World Bank report ranking China 12th in the world in terms of total tax rate.

Lou Jiwei, former finance minister and now head of the National Council for Social Security Fund, told Xinhua in an exclusive interview that the World Bank’s micro methodology differed from common practices in terms of the scope of indicators and choices of data.

Lou said that using the World Bank’s method to compare tax burdens among different countries did not make much sense.

The report jointly released late last year by the World Bank and accounting firm Price waterhouse Coopers records taxes and mandatory contributions that a medium-size company must pay in a given year.

The report said China’s total tax rate was 68 percent in 2016, much higher than the world average of 40.6 percent.

Lou said that when comparing tax burdens among countries, a key figure was the macro tax burden rate, or the ratio of a country’s tax revenue to nominal GDP.

In both 2014 and 2015, the macro tax burden in China stood at only around 30 percent, lower than the world average, Lou said.

The Ministry of Finance said in December that more tax breaks and fewer administrative fees would be extended for businesses this year to lower costs for companies.

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