China: "Golden Tax System Phase III" - China's "Internet+Tax" Era Opening

Last Updated: 28 September 2016
Article by Rose Zhou, Julie Zhang, Wilfred Chiu, Roy Zhang, Pan Xiaodong and Li Zhaoxia

Summary

The "Golden Tax System Phase III", the new tax management system of China, has been successfully online and running smoothly recently in Beijing, Shanghai and other places. It is expected to generalize throughout the country by the end of 2016. In this article, we will analyze the main characteristics, the significance and expected influence of "GoldenTax System Phase III", and new effect on tax matters and tax risk control based on the background of the China's State Administration of Taxation ("China SAT") carrying out the modernization of tax collection and administration.

Background

The China's "13th five-year" national plan clearly puts forward the implementation of "Internet +" action plan and the national strategy of the "Big Data". The implementation of the national strategy means Chinese economy will be more and more influenced by the changes of business model and value creation pattern and setting up tax system and tax collection and administration system in "Internet + tax" which is consistent with the national strategy and promoting "Smart Tax Management" becoming the main task of China SAT.

The main characteristics of "Golden Tax System Phase III"

In 2015, "GoldenTax System Phase III" optimization system was released in China, aims of one platform, two processes, three covers, and four systems, carrying the important mission of modern tax administration system reform.

  • "One Platform", achieves the network interconnection among China SAT, all level tax authorities and other government departments.
  • "Two processes", establishes twostage data processing center between China's State Administration of Taxation and the provincial tax administration, and establishes data processing mechanism of relying mainly on the provincial tax administration and China SAT as a supplement, aims to realize that data information of tax system can be centralized processing in the State Administration of Taxation and the provincial tax administration.
  • "Three Covers", covers all kinds of tax, the important work units in tax administration and national tax and local tax authorities at all levels, and achieves the network interconnection with the relevant departments.
  • "Four Systems", establishes collection and administration system for taxes, external information system for external information exchange and service fortaxpayers, and establishes matching administrative system for tax system internal administration and decision supporting system for tax economy analysis, monitoring and prediction at all levels tax authorities.

"Golden Tax System Phase III" achieves nationwide online tax registration, and full tax (fee) online declaration. Tax bureau can achieve multi-level and multi-angle tax analysis and assessment on "Big Data" of comprehensive tax by industries, taxes types, enterprise types, business models, business natures, and regions. Tax bureau also can realize dynamic comprehensive tax analysis of the operating situation of a certain enterprise.

Through "VAT Invoice Upgraded Version" system, tax bureau can also achieve risk screening based on the collected invoice data. The upgraded VAT invoice system can collect overall information on the VAT invoice. Compared to "seven factors collection" in original VAT invoice system, the new system extends to the core trading information of the enterprises, and achieves the information collection for categories of the goods and services. It can master the situation of enterprise about the types of sales of goods and services, the relationship between buyer and seller, the truthfulness of its business and so on. The new system can provide "Big Data" supporting for the tax bureau in further substantial tax assessment.

According to Chinese tax bureau planning, it could be expected that "Golden Tax System Phase III" will gradually achieve tax declarations and invoice administration interaction between taxpayers and tax authorities through the internet before year 2020.

  • Online tax registration and acceptance inquiries Conducts tax registration, withholding agent registration, and tax registration information inspection via internet.
  • Online tax declaration and tax Payment Achieves overall coverage of tax declaration and information collection via internet.
  • Online tax refund and export tax Rebates Connects the external applications and the internal approval workflow, electronize tax rebates business and realize one-stop online service.
  • Online self-service invoice Requisition Provides online invoice requisition services, implements auto-inspection of used invoices, introduces modern logistics services to delivery paper invoices, optimizes tax certificates issuances, promotes online processes of various tax certificates such as tax clearance certificates, Chinese tax residents certificates etc., supports printing through internet platform and ARM, and realizes online authenticity inspection on tax certificates.
  • Online e-invoices issuancesBased on the updated VAT invoices system, utilizes techniques such as digital certificates, 2D barcode etc. to formulate the uniform e-invoices data file.
  • Online invoices inspection Builds national uniform cloud platform of invoices inspection, fully realizes national invoices one-stop inspection services.
  • Enterprises' non-compliance information disclosure Provides internet inquiries on taxpayers' credit rating, regularly publishes tax audit cases announcements, blacklist, enforcement procedure, etc. to form an effective supervision and restriction system.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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