Problems And Countermeasures About The Taxation Coordination Of The Two Sides Of The Strait And Four Regions

Mainland, Hong Kong, Macao, and Taiwan, named after the two sides of the strait and four regions in China ,practice different taxation systems, which impacts on the teamwork of four regions . The deeper extent of four regional economy integration, the negative function also becomes more obvious. As a result, it is essential to progress the four regional economic harmonious growths that we research the present condition, find out the problem and put forward the related suggests.Authorities of four regions in China have taken many harmonious taxation policies. For example, the agreement of avoiding double taxation between mainland in china and Hong Kong, signed by the central government and the government of Hong Kong special administrative region in 1998. There is also a similar one, signed in 2003, in mainland and Macao. The two agreements have the positive effect on elimination of double taxation between mainland and Hong Kong-Macao. At the same time, mainland and Taiwan carry out respectively tax measures concerning foreign affaires. An item on tax credit is included in both the income tax laws of mainland and the rule on people relation between mainland and Taiwan, promulgated by Taiwan, which helps forward to alleviate cross-strait double taxation. Apart from income tax policies, Authorities of four regions set out more policies on tariff. Free duty in CEPA, signed between mainland and Hang Kong- Macao in 2003, is given to the goods originated from the two regions. The regulation of encouraging Taiwan countrymen to invest launched by state council in 1988, offers import duties preference to the import goods from Taiwan needed by the Taiwan-invested businesses in mainland. These policies are favor of the growth of goods trade among four regions.Although Authorities of four regions have great effort in harmonious taxation, there are still some insufficiencies. In income tax aspect, the simple regulation on ordinary credit in mainland tax laws gives rise to the issues on double taxation of cross-border corporate incomes covering mainland in China and Hong Kong. Meanwhile, the issues on double taxation have been for a long time because of lack of the bilateral agreement on avoidance of cross-strait double taxation. In tariff aspect, CEPA have only limit influence on the growth of manufacture industry in Hong Kong-Macao region and the rules of origin have to be modified detailedly. Besides, four regions neglect the difference of domestic goods tax, such as the inconsistence on both the rate and the type of value-added tax. In short, these conditions would go against developing the four regional economy.So, the article points out that it is necessary to coordinate taxation further. For example, to supplement the item of indirect credit in mainland tax laws, to push actively on the consultation on the basic problem of the income taxes between mainland and Taiwan, to promote the detail talk on origin between mainland and HongKong-Macao, to manage to put the tariff concession plan in operation based on normal conversation between the sides of the strait, and to make the plan of coordinating domestic goods taxes on the basis of the implications of European.