ofTotal Local Government Revenues for Shared Taxes

154 Baoyun Qiao and Anwar Shah

TABLE 4.8 Bases, Rates, Sharing Arrangements, and Percentages of Total Local Government Revenues for Shared Taxes

Share oflocal revenue, Tax Base Rate (%) Sharing arrangement 2003 (%)

Business tax Services provided 3–20 All business tax 28 except for that on rail transportation and on headquarters for banks and insurance companies Value added tax Added value of 0–17 25% domestic VAT 18 production and productive service Enterprise income tax Taxable income 33 40%, except for tax 9 on centrally owned enterprises; local banks, foreign banks, and other financial corporations; rail transportation; and headquarters for banks and insurance companies Individual income tax Taxable income 5–45 40% 6 Foreign enterprise Taxable income 15–33 Same as enterprise income tax income tax 3 Stamp tax on security Transaction value 0.003 3% 1 transaction on document

Source: Unpublished data from Ministry ofFinance and State Administration ofTaxation ofChina.

ment for subprovincial governments.However,the key point it stressed was the discretionary role ofprovincial governments.This arrangement implies that revenue assignments may vary by province.The current practice can be summarized as follows:

Revenue from the major or key industries belongs to the provincial government;for example,business tax payable by the financial industry belongs to the provincial government (Zhang 2005).