Research On The Entrusted Tax Levy System In China

With the development of economy, the value of entrusted tax levy to a third party is easy to see. It can reduce the cost of tax collection and add up the small amounts of tax.As the tax reform deepens when value-added tax has replaced sales tax, local tax bureau can no longer control the levy of taxes through issuing tax invoices. As a result, the levy of individual income tax, city construction and maintenance tax, as well as other taxes will be significantly influenced. Thus, for local tax bureaus, it is a viable way for them to levy taxes thorough a third party or the state tax bureau. Yet, we do not have a clear legal definition of entrusted tax levy. The lack of legislation as well as academic research on entrusted tax levy has greatly hindered its progress. In reality, people often mistake it for entrusted tax deduction or collection. This essay will first introduce the definition and the characteristics of entrusted tax levy and compare it with entrusted tax deduction and collection. Then, based on our tax practice, I will discuss six major problems of entrusted tax levy, from the lack of legislation, its lack of clear boundaries, its lack of clear entrustment clauses, the inappropriate rules about what to do when the entrusted party levies taxes more than required, the controversial rules about the compulsory execution of entrusted tax levy to inadequate rules about the liabilities of the entrusted body. To solve these problems, I suggest that we should draw clear boundaries of entrusted tax levy, clarify entrustment clauses, make clear rules as to what to do when an entrusted body levies more taxes than required and set up rules about compulsory enforcement. With these measures in place, entrusted tax levy will be on the right track.