The Chinese government said on Sunday that it will tighten its tax collection practices to extract more revenue from the country's highest earners. The State Administration of Taxation has instructed local bureaus to work more closely with other departments to improve collection of personal income tax, the government body said in a statement on its website.
The main focus of the tax collection drive will be money earned from selling equity and houses, stock dividends, bonuses, and from auctions. The tax administration will work more closely with the country's commerce ministry and with auction houses, said the statement.
Tax evasion is a long-standing problem for China's tax collectors, particularly among the wealthy, many of whom have seen their tax burden rise in recent years.
In late January, China launched a long-awaited home ownership tax in Shanghai and Chongqing, part of Beijing's campaign to rein in soaring real estate prices. And in January the government cancelled tax incentives it had used to spur demand for small cars.
Forbes magazine ranked China second in its 2009 "tax misery index", behind only France. Beijing questioned the methodology behind the index. Xiao Jie, chief of the national tax administration, wrote in an article in October that the government's real tax and fee revenues accounted for 30 percent of gross domestic product, well below an average of 43 percent in developed economies.
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