Rich and famous to top taxman's hit list in new drive

PUBLISHED : Monday, 17 December, 2001, 12:00am
UPDATED : Monday, 17 December, 2001, 12:00am

Tax authorities in Guangzhou are to implement a system that will see incomes of the rich and famous put on a watch list from the beginning of next year.

The scheme is part of a drive to 'catch the big fish' who dodge paying income tax.

Authorities have targeted 13 types of individuals, including those from Hong Kong and other overseas countries, in 11 industries as 'key taxpayers' in an effort to plug loopholes in a system that charges salaried employees heavily, but lets others off the hook.

China bases most of its tax on salary, which has become a less important source of income for the wealthy.

According to data obtained by Southern Metropolis News, 80 per cent of Guangzhou tax is collected from salaried employees.

Expatriates and overseas Chinese, including those from Hong Kong, Macau and Taiwan, will reportedly be on the target list of the new scheme.

Domestically, rich people such as athletes, film stars and highly paid professionals would also be subject to such scrutiny, together with business owners and contractors, the Southern Metropolis News said.

The 11 categories chosen include telecommunications, finance and insurance, media, law and accounting firms, golf and football clubs, hotels above four stars, listed companies and entertainment firms with an annual revenue above 10 million yuan (HK$9.4 million), as well as foreign-invested and hi-tech companies.

Beijing also plans to put those perceived as rich on a list, with half of those being government officials and managers of state-owned enterprises.

In Guangzhou, the tax authorities focused on the private sector.

The work places of the key individuals on the watch list will need to report their sources of income to tax collectors for special files.

Four types of individuals - contractors, business owners, finance directors of the key industries and people with double incomes - will need to file their personal incomes on a monthly basis. Guangdong also plans to link the special files with the banking system in order to monitor fund movements more effectively, the Shenzhen Economic Daily reported.

But tax authorities admitted to difficulties in tracking grey income from transactions that are carried out in cash.

Professor Yang Weihua, of the finance and taxation department at Zhongshan University, said the new method should help to collect more from the rich, but warned that China lacked an objective and clear definition of 'wealthy'.

According to a national seminar on personal taxation in Wuhan this year, experts believed that an annual income above 60,000 yuan should be regarded as rich.

However, a survey by the Statistics Bureau taking in 10 provinces and municipalities drew the line at 30,000 yuan.