Up till now tax evasion was quite easy in China since high income bracket taxpayers could easily divide their income into different categories and hence evade taxes. The loophole existed in the present system where income tax could be paid under eleven different categories with various rates and thresholds. Now the tax authorities in China are looking to club total income under a single head for the purpose of simplifying tax calculation and plug evasion.
Under the present tax system just a small percentage of top earners of China filed tax statements till the April 2nd deadline. Just fifteen percent of the high income earners paid their taxes which equals to 1.37 million people. The tax department is also looking to bring down the number of IT tax bands from current figures of nine to five. The changes are expected to be implemented by 2010. It will not only bring down tax evasion instances but also generate more revenue for the government. Looks like golden days for tax evaders are over.
Via chinadaily
