The Improvement Of The System Of Enterprise Income Tax Collection By Assessment

Tax collection by assessment is applied in the tax administration practice to ensurethe effective exercise of the taxation right of the state in the current circumstance thatthe compliance of taxpayers with tax laws and the accounting capacity of small-andmedium-sized enterprise taxpayers need to be improved. Proceeding from enterpriseincome tax, in which the tax collection by assessment is applied popularly and the taxrevenues contributes a fairly large proportion, this paper provides an analysis on theproblems existing in enterprise income tax collection by assessment in China and makesrecommendations on the improvement of the system of enterprise income tax collectionby assessment from the perspective of tax administration and legislation.The first part describes the theories related to enterprise income tax collection byassessment and sorts out and generalizes various concepts of tax collection byassessment in theoretical circles; starting from the general principle of tax laws, itindicates the legal principles to be followed in the application of tax collection byassessment; meanwhile, from the aspects of the exercise of the taxation right of the state,the administrative costs of tax collection and taxpayers’ compliance costs in taxpayment, it describes the roles of tax collection by assessment in the practice ofenterprise income tax administration.The second part focuses on the analysis on the problems existing in enterpriseincome tax collection by assessment in China. It firstly analyzes the relevant regulationsin China’s current laws, codes and regulatory documents on enterprise income taxcollection by assessment and the abuses in enterprise income tax collection byassessment; then it further analyzes the problems existing in enterprise income taxcollection by assessment from the perspective of tax administration and legal regulation.The major problems existing in tax administration are: inexact determination of the standards for the application scope and improperly excessive coverage of tax collectionby assessment; lack of follow-up management of the enterprises that are levied tax byassessment; failure in supervision and guidance the transformation of tax collection byassessment into tax collection on audit of accounts and insufficient efforts in taxinspection for the enterprises that are levied tax by assessment. The major problemsexisting in tax laws and regulations are: lack of legislation of enterprise income taxcollection by assessment; most provisions existing in the normative documents whichare of low level of effectiveness, and the overall fragmentary assessment system;unclear standard for the application of enterprise income tax collection by assessment;lack of unified specific methods of operation and technical standards; less normativeexercise of discretion and unsound relief systems for the assessment dispute.The third part puts forward specific management recommendations and legislativeproposals from the perspective of normalization of enterprise income tax collection byassessment and administration and the improvement in legislation. As for thenormalization of tax collection and administration, it specifies that enterprise income taxcollection by assessment acts as a special supplementary mean of tax collection on auditof accounts and a transitional measure in management, so the applicable objects must bestrictly approved; it is necessary to strengthen the follow-up management and the taxinspection for the taxpayers that are levied tax by assessment and supervise and guidethem to transform tax collection by assessment into tax collection on audit of accountsthrough the establishment of the follow-up management system. As for theimprovement in taxation legislation, it expressly describes the legal status of taxcollection by assessment and holds that any attempt to improve its legal levels requiresthe construction of a sound system and the restraints on the abuses in tax collection byassessment to further improve the collection methods and standards. We should restrictthe discretion of tax collection by assessment and further safeguard the interests of thetaxpayers that are levied tax by assessment.