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Regulators mull stamp levy reform

By Qiu Chen  (Global Times)

08:26, June 14, 2012

China is considering abolishing non-security stamp duties or combining them with other types of taxes in a bid to simplify the tax system, the Shanghai Securities News reported Wednesday, citing insiders close to taxation authorities.

The government has decided to put doing away with non-security stamp duties on its agenda mainly because these taxes - levied primarily on contracts, deeds and related instruments - are not only seldom used and but also often evaded, Wang Surong, professor of taxation at University of International Business and Economics, told the Global Times.

"Non-security stamp duties have been ignored in actual tax collection as they are usually insignificant in terms of how much they levy," Wang said. "Over 50 percent of stamp taxes are evaded as they are based on tax payers' self-discipline - tax payers calculate and pay them by themselves and regulators seldom make special checks on stamp duties."

The tax rate on non-security stamp duties - which range between 0.03 percent and 0.1 percent - is far lower than most other major taxes, such as the 25 percent corporate income tax levy, and the money these taxes generate accounts for a tiny proportion of the government's fiscal income, Wang said. "Now that they are of little importance, it is natural that the government wants to abolish them, a move which could reduce administrative costs and lower companies' tax burdens," Wang said.

Non-security stamp taxes were not even listed in the tax revenue reports made by the Ministry of Finance. In this year's fiscal budget, released in March, the total estimated income from stamp taxes equals the amount expected from security stamp tax levies, indicating that revenue from non-security stamp taxes is too small for the government to mention in its budget.

Also, the government may cut out non-security stamp taxes since levying them could, in some cases, lead to duplicate taxation, said Yu Xiancai, a tax expert from Fudan University's Center for Public Economy Research. "As business taxes or value-added taxes are usually paid when a contract is signed, it does not make sense for the government to levy a stamp tax on them again," Yu said.

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