Auditors uncover some questionable accounting
By Zhang Fengming |
June 15, 2010, Tuesday
|
Print Edition
Print Edition
CHINA'S top auditor has uncovered more than 13 billion yuan (US$1.9 billion) of fiscal revenue being wrongly rebated to companies and individuals by local governments as incentives to make the books look good.
The National Audit Office completed an 18-month fiscal revenue management review ending in June of 15 provinces and the two cities of Dalian and Shenzhen.
It found seven provincial-level governments and 59 at lower tiers had handed out money to firms and individuals as investment incentives, the state audit office said on its Website yesterday.
Tax and money raised from land auctions valued at 12.57 billion yuan had been paid back to companies under the guise of "government grants" or "fiscal subsidies" from local governments to attract investment, it said.
Another 463 million yuan was rebated to senior managers as funds for homes and automobiles or in salary bonuses, the auditor said.
Capital used to build homes or buy luxury cars is clearly in breach of the law.
Gray areas
Tax incentives are gray areas created by local governments to shore up competitiveness but auditors believe they are outside of prudent management practices.
China has tax-rebate policies on exports in some industries and allows levy breaks on small and medium enterprises in sectors it encourages.
Some local governments get around tax-refund rules by sending out capital as "bonuses" for talented people or "incentives" to attract top-level employees.
The audit office did not name the local governments involved in the questionable tax schemes.
It only listed the areas that were under inspection, which include Shanghai, Beijing and Chongqing and the provinces of Hebei, Shanxi, Jiangsu, Jiangxi, Sichuan and Qinghai.
"No big irregularities were discovered, but loose action on fiscal revenue collection, capital management and budgeting were found," it said.
China shifted to a positive fiscal policy in 2009 to boost domestic consumption and investment and cushion the global financial crisis.
China's fiscal revenue growth exceeded targets last year as a recovery in the world's fastest-growing economy boosted tax income amid higher state spending.
The National Audit Office completed an 18-month fiscal revenue management review ending in June of 15 provinces and the two cities of Dalian and Shenzhen.
It found seven provincial-level governments and 59 at lower tiers had handed out money to firms and individuals as investment incentives, the state audit office said on its Website yesterday.
Tax and money raised from land auctions valued at 12.57 billion yuan had been paid back to companies under the guise of "government grants" or "fiscal subsidies" from local governments to attract investment, it said.
Another 463 million yuan was rebated to senior managers as funds for homes and automobiles or in salary bonuses, the auditor said.
Capital used to build homes or buy luxury cars is clearly in breach of the law.
Gray areas
Tax incentives are gray areas created by local governments to shore up competitiveness but auditors believe they are outside of prudent management practices.
China has tax-rebate policies on exports in some industries and allows levy breaks on small and medium enterprises in sectors it encourages.
Some local governments get around tax-refund rules by sending out capital as "bonuses" for talented people or "incentives" to attract top-level employees.
The audit office did not name the local governments involved in the questionable tax schemes.
It only listed the areas that were under inspection, which include Shanghai, Beijing and Chongqing and the provinces of Hebei, Shanxi, Jiangsu, Jiangxi, Sichuan and Qinghai.
"No big irregularities were discovered, but loose action on fiscal revenue collection, capital management and budgeting were found," it said.
China shifted to a positive fiscal policy in 2009 to boost domestic consumption and investment and cushion the global financial crisis.
China's fiscal revenue growth exceeded targets last year as a recovery in the world's fastest-growing economy boosted tax income amid higher state spending.
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