Corporate Tax And Tax Collection Process In Construction

In 2005, China's tax revenue reached 3.09 trillion yuan, up from 478.9 billion yuan in 1994. This dramatic increase is largely due to its continuous and fast-paced economic growth. In the meantime, it should also be attributed to improved taxation methods and the universal application of information technology. The main function of a tax department is to administer taxation, that is, to convert the existing taxable resources into revenue. This requires them to gather all tax related information. However, information asymmetry induced by taxation costs and other limitations handicaps effective tax collection. Therefore, the challenge to the tax agencies is how to convert all possible taxable resources into tax revenue.This paper examines the information asymmetry within the tax system. We studied the evolution of taxation methods following the 1994 tax reform, as well as the utilization and development of information technology in local offices. We also surveyed local agencies and investigated their practices. We constructed the model of tax collection and administration based on the Game Theory and information economics. Our findings are: 1) Reorganization and optimization of existing business process are to be done according to the characteristics of information technology involved; and 2) the improved business process is to be the basis of utilization of information technology. This will lessen the effect of information asymmetry in the within the tax system and between the tax administers and taxpayers. It will also promote economy, efficiency and effectiveness in tax collection and administration and provide better service to taxpayers.