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Tax distribution change causes revenue surge

Updated: Sep 4,2016 10:52 AM     Xinhua

BEIJING — A new way of distributing business tax revenue between China’s central and local governments caused a surge in the former’s revenue, the Ministry of Finance (MOF) has clarified.

According to an MOF report this week, the central government’s business tax revenue soared more than tenfold year on year in the first seven months of 2016, raising public concern.

The MOF said the central government began to share 50 percent of the country’s total business tax revenue, from previously a tiny portion, on May 1, when China fully implemented its value-add tax reform.

Before May, the central government collected business tax only from the headquarters of some banks and insurers. In 2015, just 0.78 percent of the total went to the pocket of the central government.

The MOF said the central government will return the increased revenue to local governments, mainly to increase support to central and western regions.

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