China's local tax regimes

How China’s tax system impacts domestic enterprises remains a crucial gap in our understanding of China’s economic institutions. Recent tax reforms in 2008 and the foreshadowed tax reforms under the new 12th Five Year Plan (2011–15) show that China is perfecting its nationally unified tax regime. Enterprise practice confirms this. National tax regulations are well documented and implemented for all major enterprises, in particular the MNC and foreign invested sector which operates in a highly regulated environment. But this is only one aspect of how the tax system works and how it impacts on enterprises. Christine Wong, in her major studies for the World Bank and the Chinese Central Government and later research, ¹ has shown that any analysis of the emergence, changes and functioning of China’s tax system needs to take into consideration the interplay of government agencies at central and provincial as well as sub-provincial levels. While she documents the variety of institutional arrangements in different provinces, she also points to the lack of institutional knowledge and statistical data on the great variety of sub-provincial levels of government.