Herong Wang' Blog

Preface

I am familiar with tax-related areas, because my major is Accounting & Taxation and before I went to Britain to pursue my master’s degree, I worked in Shanxi Tax bureau as a tax collector. Through this experience, I have a clear understanding of taxes. Meanwhile, my undergraduate major is Accounting which is deeply related with many aspects of economic calculate, especially tax accounting. Besides, with the rapid impact of the digital wave on the economy today, I deeply feel that the tax collection is also taking place in a great change.

1．Introduction

As is well-know that taxation is an important means of redistribution of social resource and has a closely related with the national economy. In the past in China, if you were a qualified law-abiding taxpayer, you will file for tax registration at the beginning of the establishment of the company, then pay tax to the tax bureau on schedule. However, with the rapid development of digitalization business, something has changed.

This essay will base on my own work experience and perspective, to talk about what changes have taken place in the work of the tax collectors and what trends are expected in the future.

2．Already changed in digital economy

-Use the internet for tax collection

In the traditional process of collecting taxes, after the completion of the declaration, taxpayers need to go to the local tax bureau hall to deal with the tax. Face to face confirm the details of tax payment is an essential part of this. And then, the tax collector will deduct the tax manually. The whole process of taxation shall be completed by taxpayers and tax collectors in accordance with relevant national tax policies.

However, in the digital world today, everything has made a great difference, including the method of tax collection. The internet is used in this process. At first, taxpayers can just open the official website of the tax bureau and input relevant information to complete the declaration. Meanwhile, the tax bureau and the bank have signed a tripartite withholding agreement with taxpayers, so after declaring dutiable tax, taxpayers can deduct the tax directly from the bank account in internet. (Bellon, Chang and Dabla-Norris, 2019) All of these are done without the involvement of the taxpayer, with a few clicks of the computer. Even without leaving the taxpayer’s home.

-Face more problems and dilemmas

In the context of the growing digital economy, internet companies are increasing acting as third parties providing platform services. This has brought many difficulties and challenges to the collection of tax.

Firstly, the delay of relevant tax policies causes the loss of tax revenue and difficulty of supervision. “in the next 30 years, the internet will be as ubiquitous as electricity, and data will be even more important than oil.” Said jack ma, founder of Alibaba Group. (Johansson, Karlsson and Stough, 2006) The internet、digital economy、digital technology will not a flash in the pan, it is going be a sustainable industry in the future. At the same time, the taxation policy in China on the emerging digital industry is not perfect, so it is very difficult for the tax collector to deal with the concrete practice. For example, In 2019, the Beijing Taxation Bureau disclosed that the annual income paid to the anchor by a live broadcast platform was as high as 490 million yuan, but due to the imperfect legal system, personal income tax was not levied in the end. Furthermore, there are more than 300 live broadcast platforms in China, and the tax losses caused are incalculable. (Sanghavi and Sóvág, 2019)

In addition, with the development of digital economy, trade can be easily realized over a long distance. Some enterprises even do not need any real space in their operation process, which provides great convenience for tax avoidance or tax evasion and it is not conducive to tax administration. (Cui, 2019) In Chinese taxation system, the identity of the taxpayer is determined by both the place of registration and the location of the head office. In the process of digital economic transactions, traders transcend the concept of specific geographical location, making identity difficult to confirm. Therefore, some enterprises set up their business sites in other countries for the purpose of tax avoidance, which makes the tax collector powerless.

3、Further changes in the future

In the future, the work of manual tax collection by tax collectors may be gradually weakened or eliminated, and various electronic declaration methods such as online declaration, telephone declaration and bank declaration will replace it. (Gulyás and Hammer, n.d.) In the meantime, the work content of tax collectors may turn to the following aspects: First, use the Internet to provide taxpayers with inquiries about tax laws and regulations, communicate with taxpayers, and help them popularize tax law related knowledge. Second, after the completion of the electronic automatic reminder and collection system, all the tax collectors need to do is check again in time. Third, accept reports of tax evasion and illegal acts, complaints, and handle these issues. Under the digital economy, tax collectors are turning to online offices to improve the quality and efficiency of tax-related matters and help the country reduce tax costs. Of course, the state’s demand for tax collectors will also decrease accordingly.

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Reference

1、Bellon, M., Chang, J. and Dabla-Norris, E. (2019). Digitalization to Improve Tax Compliance. Washington, D. C.: International Monetary Fund.

2、Johansson, B., Karlsson, C. and Stough, R. (2006). The Emerging Digital Economy. Berlin, Heidelberg: Springer-Verlag Berlin Heidelberg.

3、Sanghavi, D. and Sóvág, P. (2019). Re: Public Consultation Document: Addressing the Tax Challenges of the Digitalisation of the Economy (13 February – 6 March, 2019). SSRN Electronic Journal.

4、Cui, W. (2019). The Superiority of the Digital Services Tax over Significant Digital Presence Proposals. National Tax Journal, 70(4), pp.839-856.

5、Gulyás, A. and Hammer, F. (n.d.). Public service media in the digital age.