• Wed
  • Dec 24, 2014
  • Updated: 4:39pm

China to step up international co-operation in fight against tax evasion

Amid revelations about use of offshore havens, the mainland's tax commissioner plans greater international co-operation to pursue evaders

PUBLISHED : Saturday, 25 January, 2014, 5:29am
UPDATED : Saturday, 25 January, 2014, 6:54am

The mainland's tax commissioner, Wang Jun, says international co-operation to combat tax evasion will be stepped up.

His comments were posted on the State Administration of Taxation's website just days after the international focus on tax evasion and money laundering was intensified following revelations from the US-based International Consortium of Investigative Journalists (ICIJ).

China would fulfil its responsibilities as a big nation in international tax initiatives, while using international co-operation to reform its tax system, Wang said at an Organisation for Economic Co-operation and Development (OECD) taxation forum in Paris this week.

He urged nations to improve their tax laws and tax collection.

Sherie Ng, Hong Kong and Southeast Asia managing director of Nice Actimize, a Nasdaq-listed provider of software to counter financial crime and money laundering, said China and other nations were likely to adopt their own versions of the Foreign Account Tax Compliance Act (Fatca), a US law that aims to combat tax evasion by US citizens abroad.

Fatca, which will take effect on July 1, requires foreign financial institutions to report to the US government information about American taxpayers or foreign firms in which US taxpayers hold substantial ownership.

In 2012 Beijing recovered taxes worth US$5.7 billion, 30 times the amount in 2008, the tax administration said.

It has reported four cases of tax fraud on the mainland in recent days, including 66.9 million yuan (HK$85.8 million) of evaded taxes in Jilin province's healthcare sector and a 23.27 million yuan export tax rebate fraud in Sichuan province.

"As the next step, the taxation administration will rigorously investigate major cases of tax fraud," the administration said.

As of November 2011, the mainland was the world's eighth biggest tax loser, losing US$134 billion from evasion a year, according to the Tax Justice Network, an international tax advocacy group. It said the US was the biggest tax loser, with US$337.35 billion evaded each year.

"This is state revenue that is being lost," Ng said. "You're talking about a lot of state revenue.

Elan Keller, of US law firm Caplin & Drysdale, said the US had led a push towards greater transparency with Fatca.

"This is catching on globally, and many other jurisdictions, such as China, are realising the importance of greater tax transparency," Keller said. "With greater transparency comes less ability to move assets to offshore tax havens.

"The OECD is making a big push towards country-by-country reporting, where local governments will have greater information sharing to look at a taxpayer's tax payments to individual countries. It is only a matter of time before country-by-country reporting leads to the publication of taxpayers' private information."

The ICIJ's leak of company registrations in offshore tax havens linked to relatives of Chinese leaders was a good example of the publication of taxpayers' private information, Keller said.


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This article is now closed to comments

One wonders, given the Mainland's supposed controls on outbound transfer of funds, how many local property transactions by Mainlanders or their fronts get reported to China?
The answer of course is Zero. Likewise Thaksin bought a house in Kings Park rise for his sister for 47m, sold it for 62.5m -that should buy a few election votes @Baht1k each; Mugabe bought a 42m house in Taipo for his daughter (that would take him 85 years to buy unfurnished at his legal salary) who was studying here, & HKG Govt condones all this.
Not just property, the SCMP reported some time back of a Mainlander buying 15 taxi licences, at $8m each, at one pop.
How many local jewellery companies sell hi value goods to Mainlanders then charge for storing them in their vaults for a 'rainy day', actually report this to the local money laundering taskforce?
The Macau casinos laundries that take cash for chips in the VIP rooms, then issues a bank draft for the chips when cashed in that can be used to buy property without raising the same suspicions?
Hotel rooms in D grade hotels staffed by lowly paid HK'ers now cost double what they were 2 years ago,local people trying to get to work watch 4 trains pass by already full yet our buffoon Government minister wants more Mainland tourists here.
The tax evasion by the Chinese businesses in China who divert to abroad of their ill-gotten money is in fact stealing money twice.
First, it is by making obscene amount in profits by depressing their workers from rightful wage.
Secondly, they rob again of the nation of its tax albeit from inequitable source.
That makes a double damage to the nation which must bear financial burden to help the working poor. Unfortunately this story is so much familiar to Hong Kong.
I believe China has no choice but to cooperate with the rest of the world to clam down the tax evasion. Money earned by the struggling working poor shouldn’t be in the pockets of the few who don’t even need that much that must find places to hide.


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