Discussion On The Tax Burden Problem Of Mainland China's Banking Industry

Banking industry is the core and pillar of China's financial system and its stability and development is the key for the healthy development of its entire economy. With regard to the banking industry, not only its operational situation and management quality, marketing capability, risk identification and control ability, monetary policy and credit policy, and monetary supervision policy, etc., but also the tax burden level and its associated tax policy system are all closely related. Upon examining the current situation, the variety in types of taxes, the heaviness of the tax burden and the unreasonableness of the tax structure of the banking industry not only restrict the development of the banking industry, but also affect the effective implementation of the function of taxation in economic regulation. At present, the main types of taxes that borne by the banking industry include business tax, enterprise income tax, personal income tax, stamp tax, urban land use tax, property tax, city maintenance and construction tax, vehicle and vessel use tax and vehicle license tax, etc., and among which, business tax and enterprise income tax, constituting 90% of the all the taxes paid by the banking industry, are the major types of taxes in the banking industry.In view of the issue of relatively heavy tax burden for Mainland China's banking industry, which is not only undermining the profitability of domestic banks, but also affecting the effective implementation of the function of taxation in economic regulation, this thesis mainly focused on this issue. With the use of my personal banking industry experience and the use of induction, systematic analysis, comparison and other methods, the tax burden of domestic banks and foreign banks in China, the tax burden of domestic banking industry and other service sectors in China, as well as the tax burden of the banking industry in China and overseas were compared on the basis of reviewing the development process of taxation in China's banking industry, and the existing relatively heavy tax burden of China's banking industry and the repercussions to the banking industry and to the economic development were analyzed. The four general principles of taxation law (i.e. fairness principle, tax efficiency principle, social policy principle and rule of tax law principle) were also used to analyze the tax burden borne by China's banking industry and the associated taxation system problems. In addition, by referring to the mature taxation systems of overseas developed nations, reformation of the taxation system with regard to the issue of relatively heavy tax burden for China's banking industry after China's WTO entry was discussed, and various reform proposals for reduction of tax burden were suggested, including improving the turnover tax system for the banking industry, improving the enterprise income tax system for the banking industry, strengthening tax collection for the banking industry, improving the taxation system for the banking industry, emphasizing on fairness and efficiency of taxation and implementing tax issues in accordance with relevant tax legislation, which would all enable China having adequate fiscal income as well as healthy and orderly development of its national economy.