A Study On Tax Burden Of China's Enterprises

The tax system reflects resource allocation between the government, enterprises and residents. The central concern of the devise of one country's tax system is the tax burden.This thesis refers three indexes, which could measure the tax burden of enterprise. These three indexes are: the tax misery index, the tax revenue as the percentage of GDP and the tax burden measured with net income of the enterprise. As with the tax burden measured with net income, which is the core concept in the thesis, could be defined as follows:The tax burden exists because the government taxes on the enterprises, the result of which is the reduction of the enterprise's disposable income. The tax burden reflects the allocation of enterprise's net income between the government and enterprise.Firstly, this thesis analyzes the composition of government's revenue. We will find tax alone do not account for a large percentage of the government's revenue. Secondly, this thesis compares the tax revenue as the percentage of GDP of China with that of the OECD countries. The conclusion is: the tax burden of China is higher than the average level of OECD countries.Lastly, this thesis argues the limitation of the index (the tax revenue as a percentage of GDP) in measuring the real tax burden of enterprise. The more scientific way is to measure the burden with the third index (the tax burden measured with net income of the enterprise). Based on the survey of many enterprises, the tax burden measured with the third index is between 55%-76%.