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July 25, 2016

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Finance minister calls for overhaul of taxation

MINISTER of Finance Lou Jiwei is calling for a taxation overhaul, saying innovative industries should also come under the purview of taxation to reflect a socially balanced economic growth.

“Preferential tax policies are needed to boost development of new business sector, but fairness also matters,” Lou said.

He was speaking at a tax symposium of G20 finance ministers and central bank governors in Chengdu, capital city of southwestern China’s Sichuan Province.

“Measures should be taken to tax emerging industries like e-commerce and digital finance to maintain a fair and equal tax system,” Lou said. Sales via e-commerce rose 28 per cent in the first half of this year, compared with an 8 per cent rise in traditional retail sales.

Lou also said poor database, taxation capacity and vested interests had made it difficult to reform property tax.

The property tax law was written in China’s latest legislative plan earlier this year, but regulators have found the going tough because of “conflicts of interests‚“ Lou said.

The meeting was also attended by International Monetary Fund chief Christine Lagarde, US Treasury Secretary Jack Lew, Secretary-General of the Organisation for Economic Co-operation and Development Angel Gurria and other ministers from the member countries.

Speakers said there was a need for consensus on a new international tax system as the world economy was at a “critical juncture” and the impact of the financial crisis was still unfolding.

Lagarde said she agreed tax policy should be part of reforms led by G20 members, while raising concerns that the “sluggish growth was under threat from political events.”

Lew said the entire taxation administration has to be updated.

“Changing business models have a serious impact,” Lew said, pointing to cross-border trade and escaping taxes.

“We need to make sure that we determine clearly where value adding is taking place,” Lew said on Saturday.


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