Tax Compliance Issue In China And Tax Culture Analysis

The history of taxation is a reflection of our society. Taxation is also a key factor of changing ownership and power shifting of political parties. The modern taxation system has been developed for hundreds of years, which is widely connected with our social, economical and individual’s lives.Recent years, the research on taxation issues are not only limited on the subject itself but also combined with various areas and thinking outside the box. One of the findings is the analysis of culture’s influence on taxation, which became more and more focused. Taxation culture is accumulated and formed under certain social and historical conditions in a long period of time. It has been developed through practice and it contents the impact on major tax parties’ideology, concept, psychological understanding and regulation towards taxation issues.From1970onwards, research is focused on tax compliance issues due to the increasing of failure to comply with taxation law. Non-compliance is becoming a worldwide difficulty for many countries. The narrow definition of compliance is that the taxpayers carry out their tax law obligations. The broad definition is that taxpayers take actions to meet their obligation by fulfilling the tax regulation and the spirit, intention, policy and goals of the taxation law. The legislature, government, taxation department and other tax enforcement agencies influence the taxpayers’ behaviors, but also reformed by these actions and effected by the taxation culture at the same time. The taxation culture will be influencing taxpayers’decision-making and behaviors by having more and more impact on different tax parties.It is necessary to introduce the "taxation culture" to resolve the taxation non-compliance issues. By carrying on and recreate taxation culture, the parties can also change the understanding and motivation of performing the taxation obligations. It will assist the legislature, government and taxation department to continually develop regulations and improve tax compliance.The essay uses standard and empirical combined comparison framework to analysis taxation culture’s important impact on tax compliance, which includes the determination basis of compliance, the formulation, implement and performance of relevant law, and current positive and negative effects on taxation. The essay is seeking the cultural roots of taxation influence factors, in order to avoid the current negative outcomes to design, select tax regulations and improve tax compliance.Based on the analysis of taxation culture, the essay raises further recommendations for the legislative transformation and development, law enforcement improvement and compliance refinement, which includes changing the traditional misunderstandings, redefining government functions, proposing public budget, improving the quality of taxation services, training modern taxation culture, and promoting self compliance policies.The contribution from the essay is the "taxation culture vs. taxation compliance" interrelation module, which involves legislature, government/taxation department and taxpayer, who are jointly involved in formulating, implementing and complying the law and regulations. Also the essay uses the module to analyse the impact on compliance under our traditional and current system, and proposes recommendations accordingly.