The Research On The Consolidated Payment Of Enterprise Income Tax

With the development and improvement of China’s market economy, more and more large-scale enterprises are implementing cross-region management. By adopting cross-region management, enterprises are able to utilize and occupy market resource more adequately, so that they maintain the dominant position in both domestic and international market competition. In this case, cross-region management should be encouraged and supported. On the other hand, to some extent, cross-region management brings new problems to the distribution of tax revenue among local governments and to the tax administration.Since 2008, China has enacted the new Enterprise Income Tax Law. According to the principle of enterprise income tax, cross-region enterprises are required to calculate their enterprise income tax on the basis of consolidated payment. In this way, the burden of enterprises’ income tax is relieved. Meanwhile, tax benefits of local governments where both the headquarters and their branches locate are protected. As a result, many countries and regions around the world adopt this taxation method. The practice of the consolidated payment of enterprise income tax in recent years shows that local governments’ tax benefits are appropriately balanced and that headquarters and branches implementing cross-region management are under good supervision according to policies. Nevertheless, under the influence of some factors, such as the incomplete applicable range of policies, unreasonable mode of allocation, various cross-region operating modes, the disparity in attraction of different-sized cities, the unclear regulations on three-level branches as well as their attachments and the weak taxation management power from place to place, the consolidated payment of enterprise income tax may have some problems in execution. On the one hand, the transfer of tax revenue still exists and it damages local governments’ tax benefits, especially the benefits of second and third-tier cities, which are absorbed by first-tier cities. On the other hand, tax management concerning headquarters and branches is defective. The condition is more severe concerning three-level branches and their attachments in particular.After conducting detailed research and analysis on the policies of the central government and several provinces and comparing the current situation of consolidated payment of enterprise income tax of Zibo with that of several other representative cities in Shandong Province, this thesis reflects comprehensively and precisely all kinds of problems in the execution of consolidated payment of enterprise income tax. In addition, by combining experience of western countries as well as other developing countries and the reality of China, this thesis aims to propose the solutions of these problems in four aspects: optimizing the consolidated payment of enterprise income tax system, improving the coordination mechanism, cultivating more talents and practicing informatization management.