A Study On Preferential Tax Policies To Promote Development Of China’s Enterprise Annuity

With the rapid development of science and technology, life expectancy increased rapidly,and following with the continued reduction of the birthrate, aging population increasedrapidly in the world since the end of the20th century. Huge social security expenditurecaused by the aging population brings enormous pressure on the government spending, whichmake the existing basic social pension system appears to be unbalance. In order to reduce theincreasing financial pressure and to make up for deficiencies of the basic pension insurance,the governments began to establish the enterprise annuity system. Also, to solve the equallyserious aging population crisis, the Chinese government adopted the proven experience of thedeveloped countries and regions, and constructed the enterprise annuity system as a way tooffset the deficiency of the basic pension and reduce the pressure on government budgets dueto the aging population.After20years of development, the enterprise annuity in China has made remarkableachievements. Though the whole scale gradually expanded, the development of enterpriseannuity is slow due to various reasons. In this essay, we analyze the current status andexisting problems of China’s enterprise. On the basis of the analysis of the Chinese relevanttax system to enterprise annuity and the comparison of some developed countries enterpriseannuity plan and preferential tax policies. We focus on analysis of the implementation of thefeasibility of the enterprise annuity preferential tax policies and tax incentives mode choice,and then give some suggestions on how to promote the development of the Chineseenterprise annuity.Firstly, we study the development process of China’s enterprise annuity system, currentstatus and shortcomings. Secondly, on the basis of the comparison of some developedcountries enterprise annuity plan and preferential tax policies, we conclude that the lack ofpreferential tax policies is the most important reason for the slow development of China’enterprise annuity. After that, by calculating the reduction of the tax revenue caused bypreferential tax policy and accounting for its proportion of China’ fiscal revenue, we get the result that it is feasible to increase the enterprise annuity tax incentives in China. Thenconsidering the case of the average growth rate of the wages and investment, and workerscontinuously pay the annuity by annually according to the fixed percentage of their currentwage, we calculated the total accumulated amount of principal, the total state tax revenue,total investment income and total after-tax retired employee income in different preferentialtax model. Based on these quantitative results, we conclude that the Chinese governmentshould increase the preferential, and we also get the optimal tax model of the enterpriseannuity in China. Finally, in combination of the analysis in this paper, we makerecommendations for preferential tax policy and some suggestions on promoting thedevelopment of enterprise annuity in China.