One of China’s senior-most tax officials says that personal income taxes are too high, and that a ceiling of 25% should be set for the country’s salaried workers.
Xu Shanda (许善达) ,formerly the vice-head of the State Administration of Taxation, said that one of the biggest burdens on Chinese enterprises at present is high labour costs, which is not the result of the exorbitant salaries of workers as much as high personal income taxes.
According to Xu the maximum 45% personal income tax for salaried employees is currently far too high, and should be reduced to as low as 25%.
Xu made the remarks at the launch of the “Sino-Foreign Enterprise Tax Burden Comparison” research report compiled by the SEEC Research Institute in collaboration with the China Entrepreneur Club.
The report conducted a comparative assessment of the taxation systems of four countries, concluding that the domestic sales value-added tax for Chinese enterprises was higher than that for German companies, on par with Vietnam and slightly lower than Poland.
The report highlighted excess VAT repayments as providing government with “interest free hidden debt” while compelling enterprises to pay extra interest on “pre-paid taxes.”