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Tax Revenue Hits US$204 Billion
China's tax revenue rose a year-on-year 12.1 percent to 1.70 trillion yuan (US$204 billion) in 2002, according to the State Administration of Taxation.

The revenue was equivalent to 16.7 percent of China's gross domestic product (GDP), which was an increase of 0.9 percentage points from 2001, the administration said.

"A majority of the tax varieties achieved excellent growth, except the enterprise income tax paid by domestic companies," an administration statement said.

Revenue from value-added taxes stood at 627.5 billion yuan (US$75.6 billion) last year, up 82.2 billion yuan (US$9.9 billion) from 2001, while that from consumption taxes reached 104.6 billion yuan (US$12.6 billion), an increase of 11.5 billion yuan (US$1.4 billion).

Personal income tax was 120.5 billion yuan (US$14.5 billion) in 2002, up 20.9 billion yuan (US$2.5 billion) from the previous year.

Enterprise income tax paid by foreign-funded firms climbed by 10.5 billion yuan (US$1.3 billion) last year to 61.6 billion yuan (US$7.4 billion).

Last year, China's tax authorities paid 125.8 billion yuan (US$15.2 billion) in rebates to exporters in a move to help foreign trade, which was up 17.9 percent from 2001.

Zhang Peisen, a senior member of the administration's Taxation Research Institute, said the steady growth of tax revenue was mainly because of the country's sound economic development, especially the improved performance of enterprises and the stable development of foreign trade.

In 2002, China's GDP was estimated to have grown by 8 percent compared with 2001.

The government's efforts to beef up tax collection also contributed to the growth, Zhang said.

Tax evasion has become a serious problem in recent years in some private and foreign-funded companies, as well as in State-owned companies in key industries.

Experts predict China annually loses 30 billion yuan (US$3.6 billion) in tax revenue due to tax evasion by multinational firms alone.

A nation-wide campaign to fight tax evasion was launched at the beginning of last year.

A number of companies and wealthy people, including famous movie star Liu Xiaoqing, were found to be dodging taxes.

In September, China began to practice a more strict tax collection management method for companies.

It required companies to register themselves with tax departments within 30 days of obtaining a business license.

Citizens will also be required to install and use tax control equipment and send figures and references to tax departments.

Multinational companies taking advantage of "relative" companies to evade taxes will be punished.

The new method will continue to play an important role in China's tax revenue growth, Zhang said.

(China Daily January 3, 2003)

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