China’s personal income tax compliance crackdown contributes to 12% rise in revenue
State Taxation Administration attributes increase to stock market gains, higher incomes in some industries and stricter enforcement
Despite sluggish consumer sentiment and concerns over income growth, China’s personal income tax revenue rose in the first five months of the year, riding on stock market gains and tighter enforcement.
Personal income tax revenue increased 12 per cent year on year to 764.4 billion yuan (US$106.4 billion) between January and May, according to data released by the State Taxation Administration on Wednesday.
It attributed the rise to active capital markets, higher incomes in some industries and stronger compliance among high-income earners.
By comparison, disposable income of residents rose by only 4.9 per cent year on year in the first quarter, according to the National Bureau of Statistics. Wage income, which accounts for the largest share of household earnings, also increased 4.9 per cent.
Huang Lixin, head of the administration’s Tax Science Research Institute, said active capital markets had accounted for nearly half of the increase.
“As capital markets remained active and more employees exercised their equity incentive plans, tax revenue generated from share-based compensation continued to increase,” Huang said. “Active capital markets contributed nearly half of the growth in personal income tax revenue.”