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China To Experience Slower Tax Revenue Growth

August 2011 - Tax & Private Client. Legal Developments by Hassans.

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At the same time as announcing an annual rise of more than 30% in tax revenues in the first seven months, China?s Ministry of Finance warned that revenue growth will slow down slightly during the second half of this year.

In fact, the RMB986.4bn (USD154.3bn) of tax revenues in July 2011 fell below the RMB1 trillion collected during the previous month, and, at an annual rise of 26.7%, already showed a marginal fall from the year-on-year 27.6% increase seen in June. In like manner, the rise of 30.5%, to RMB6.7 trillion, seen in the first seven months of this year was below the 31.2% rise attained in the first half of last year.

The higher tax revenue in 2011 has been explained by the growth in China?s economy, price increases and an increase in imports. There have been further substantial increases in value-added tax, corporate income tax, sales tax and import tax receipts.

The Ministry has reported that, in the second half of this year, a relative slowdown in economic growth and the implementation of personal income tax reforms (including an increase to tax thresholds) are expected to decrease China's fiscal revenue growth to a certain extent.

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