The New Round of Deepening Tax Reform in China

Yan Guo

doi:10.6981/FEM.202411_5(11).0005

Authors

Yan Guo

DOI:

https://doi.org/10.6981/FEM.202411_5(11).0005

Keywords:

Tax Reform; Direct Taxes; Indirect Taxes; Deepening Reform; Modernization.

Abstract

In July 2024, the Third Plenary Session of the 20th Central Committee of the Communist Party of China charted a new course for China's tax reform. The reform of China's tax system has progressed through three key phases: the initial phase following the commencement of the reform and opening-up, the phase of establishing a socialist market economy, and the phase of comprehensive deepening of reforms. After a series of reforms, the current tax structure exhibits a high proportion of indirect taxes and a relatively low proportion of direct taxes, which undermines the tax system’s capacity to adjust income distribution and promote macroeconomic growth. Therefore, the future trajectory of China's tax reform should prioritize increasing the share of direct taxes, with a particular focus on reforming the corporate income tax, personal income tax, and property tax systems.

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