| The development of Chinese income tax systems have undergone three stages since the founding of the People's Republic of China. The first stage was from 1949 to 1957, a time of domestic economy recovery and reconstruction of social democracy, which is also a time for establishing and solidifying the income tax system. The second stage lasted from 1958 to 1978, in which China experienced its hardest time of great leap, and the three years' natural disasters and the upheaval of culture revolution. The tax system of this period also developed uneasily. Since the implementation of the reform and opening up policy in 1978, the reform of tax system in China has entered a time of fast and continuous development.Tax system plays an important part in the financial system of China. The financial system also serves the political system and social development. They should be in compliance with each other. Thus, the changes and reforms on tax systems of new China are the inevitable need of the social development. There are five historically significant tax system reforms in new China. The first and the second refer to the establishment of tax system in 1950 and simplification of the system in 1958. Since 1978, the next period of recovery and preparation for further tax system reformation began. A lot of work has been done in the ideational, theoretical and organizational aspects a reality, with a firmly foundation laid for the forthcoming reforms at the same time. The following reform happened in 1984, in order to meet the requirement of a designable social market economy, it implemented the tax for profits in most state-owned enterprises and thoroughly reformed the industrial-commercial tax. Thus we have altogether 37 types of industrial-commercial taxes in China. This kind of tax can be divided into seven groups according to its economic quality and function, namely, import turnover tax, income tax, property tax, action tax, resources tax, specific tax and international tax. And it has overthrown the non-tax discussion and tax inutility discussion, further establishing its position in the balance of economy, providing a firm base for the tax reformation in 1994. The last refer to the reformation of tax sharing system in 1994. The 14th National People's Congress confirmed the goal for the reform of socialist market economy, which has continuously increased the basic function of market in the allocation of resources and has unfolded the disadvantages of the former financial system. The "dinner-sharing pattern" fiscal system characterized by of laying down right and yielding benefit has greatly weakened central government's capacity for macro-control, and thus put the government to an unprecedented situation of "weak central" since the system was implemented till 1993.The system of complete financial responsibility extremely insists on the positiveness of local incomes, which has put too much increased income distribution to local government and has decreased the proportion of central government's financial income increment, thereby causing yearly drops of proportion of financial income in GDP. The decreases in both sides indicated that the national financial capacity was decentralized too much, which weakened the macro-control ability of the central government. In order to add more empower the macro-control ability, and to associate the relation of allocation between central and local finance, the State Department issued the A Decision on Financial Administration Reform of Tax Sharing System in 1993 and in the year 1994 it was implemented.Tax Sharing System refers to a policy arrangement between the central government and local governments on tax collecting and spending. The system divides all tax items into State taxes, local taxes and several shared taxes. The State taxes mainly include tariff, excise, income tax from the enterprises of central government, etc.; while the local taxes include sales tax (finance and insurance departments excluded), agriculture tax, etc. Taxes shared by both parts include value added tax, resources tax, stamp tax, enterprise income tax, individual income tax, etc.The central government shares 75% of the value added tax with the rest 25% to the local government. Distribution of resources tax depends on the types of resources, largely part of it goes to the local while tax of petroleum goes to the central government. The local and central governments share half of the stamp tax, respectively. And 60% of the enterprise income tax goes to central and 40% to local government. The central government is responsible for the budget expenses of national defense, diplomacy, transfer payment and strategic exploitations, while the local government takes the responsibility of public services like liberal education, medical care and so on.When looking back to the 10 years of implementation of tax sharing system, it has obviously gained great achievements and it is proved to be the most stable financial system since the founding of new China. However, the 1994 tax sharing system, restricted to its historical limitations, only served as a systemic frame of that period and will surely be improved along with the development marketing economy and its requirements.To meet the need of the increasing political, economic and social prosperities of China, the central government decided to further optimize the financial and tax system under the public financial and political principle and international convention. The reform of income tax increment sharing was implemented after breaking the way of allocating income tax in line with administrative subordination and tax items, 50% of which went to the central government and the other half to the local government, and for the increment after 2003, 60% for central government and 40% for local government. The increased amount in tax of the central government was mainly used for general transfer payment in central and western area to reduce the disparity.From the view of tax system development history, the reform of the system has its own development process, and it will not stop for development unless the economic development environment enters a static or unchanged state.As the crossing point of economic system reform and political reform, tax reform has experienced many changes, and has, in collaboration with the reforms of prices, the state-owned enterprises and the ones in the monetary, financial and other fields. In conformity with the road of reform of the overall market of China, the tax reform is on the same wave-like and ladder-like road. The tax reform of China has witnessed the transmission from administrative right sharing to economic right sharing. The balance of tax system has leaned more to the side of commodity turnover tax than factor tax. From being highly confidential, the budge management has gradually become transparent.The development history of a law contains and records the history of a nation. Looking back on the history is aimed at predicting the future. To know a law, one has to know its past. Only in this way can one predict its future trend. Therefore, only by knowing the history of income tax can one understand the new enterprise income tax. The history of the enterprise income tax can be divided into five stages, namely, the one before the founding of the new China, the one after the founding of new China but before the reform and opening up of China, the one after the reform and opening up, the one before the reform of enterprise income tax in 2008, and the one newly implemented in 2008.Since the reform and opening up, the national economy has become increasingly dependent on the international environment. The economic globalization has pushed forward the development of tax reform on an international scale. To improve the degree of unification of China's tax system and the international tax system, and to strengthen the national economy's long-lasting competitiveness, the reform and improvement of tax system are a must. Various tax items and tax rates should be changed to the unified tax items and tax rates, the unified deduction standards and the unified ways of tax collection and management. This is the choice that not only China but also many other countries around the world have to make in terms of tax reform. Therefore, to speed up the reform of enterprise income tax featured by "combing the two laws as one" is great significance and must be done at this best time when everything is ready. Under the premise of the fact that tax income has increased constantly in recent years, taking into consideration the fact the fair tax principle must be followed, plus many other reasons and conflicts in many aspects tax, the reform of income tax must be carried out. The only thing left is a matter of timing to do it. The new reform has come into existence under the condition fiscal revenue has already met the demand of tax reform. The new system can guarantee the nation's fiscal revenue and at the same time can minimize the tax payers' pressures.The differences in all factors of the old and the new tax systems are centered on the comparison of tax payer factor (including scope to which the reform is applied and who is the subject of paying the tax), comparison of deduction and not deduction, comparison of incentives on tax, and the comparison of the particular tax on correlated deal. The effects of such the changes of the income tax on telecommunication enterprises are manly concentrated on tax payers, tax rates, confirmation of income, the deducted items in preferential policies, fixed assets and anti-tax avoidance articles, etc. The telecommunication enterprises which are in the new tax system's transitional period and the period of restructuring telecommunication services should keep close eyes on the policies and changes in this regard, and take active countermeasures at any time needed. Since the new income tax was implemented in more than one year ago, it has been actively and widely recognized. But problems such as the incomplete eradication of the inherent defects of the old tax system, the blurred definition of the new concepts and the unclear implementation caliber of the policies, etc. There are the reasons and practical restrictions that have caused these problems. When paying the tax, enterprises have puzzlements on some policies, thereby failing to have a good control, which not only increase the possibility for enterprises to conduct subconscious breach of the law but also make it harder for tax collection institutions to manage. The drawing up and implementing a tax law will be subject to restrictions caused by function definition of the tax item and actual tax collection and management ability. An excellent theory framework that is independent from practicality is of no sense at all. Therefore, a different but appropriate tax system should only be chosen at a different social development stage due to the fact that an optimized tax system is nothing but a goal, and can not implemented under the complicated conditions existing in both good and bad form in reality. To reach that point can be decided only by the design of tax system. By contrast, it is an evolution result of the society. The tax system in implementation should be compatible with the tax environment formed such factors as politics, economy, society and the man themselves and so on. This has been proved true by the history of tax reform development of China. In fact, the function configuration of a tax item is decided by the tax environment decides. Theoretically, the income tax has two dual functions of income and adjustment which need to be realized. The income function means raising funds for the nation which is the basic function and leading role of tax, and adjustment function is to adjust the obvious allocation of income by following fair-play principle of the society. However, judging from the tax items of the income kind in different countries, overemphasis on the adjustment function in the current stage will lead to the overcomplicated design of tax system. Under the current situations and for the unclear part that the new income tax system shows in the implementation period, telecommunication enterprises are suggested to respond actively, reasonable review tax payment risks, and keep close eyes on the newly issued regulations and details as well as the documents of interpreting the new system. Paying the tax as required and preventing risks should be done satisfactorily at the same. |
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