An audit by the Shenzhen taxation bureau of brokerages with operations in the city turned up serious tax evasion problems at 22 of them, Southern City News said. The offenders were found to have abused rules on the calculation of tax liabilities and to have under-reported revenue; they were ordered to pay a total of Yn18m in tax arrears and penalties for evasion. The audit, which began earlier this year, was part of a nationwide review of tax payments by securities firms ordered by the State Administration of Taxation.
South China Morning Post reported that government tax revenues grew by 10.9 per cent year-on-year in the first half of 2002, in contrast with a 27 per cent increase in the same period a year ago. The decline was attributed to lower tariff rates on imports under China's commitments to the WTO and falling stamp duty income due to sluggish stock markets. The government is therefore hoping to rely more on personal income tax as a revenue source. This currently accounts for 6.6 per cent of total tax revenue, far less than the 20 per cent of many developed countries.