Research On Enhancing Compliance Of Individual Income Tax Under The New Institution In China

Since the 19 th CPC National Congress,the CPC Central Committee with Comrade Xi Jinping as the core has attached great importance to tax work.As one of the most important direct taxes in China,individual income tax plays an important role in adjusting the gap between the rich and the poor,increasing fiscal revenue,reflecting tax fairness and promoting social stability.In 2019,the seventh revision of the Individual Income Tax Law of the People’s Republic of China came into effect,marking the establishment of a new personal income tax system and an important milestone in the establishment of a modern fiscal and tax system.It has been three years since the operation of the new tax law,but the compliance degree of the tax law for the majority of natural person taxpayers in China is still not high.Cases of high income people evading huge amounts of tax are common,which seriously disturbs the tax order and is not conducive to the function of individual income tax.To explore an effective measure to improve individual income tax compliance,through literature research at home and abroad for reference,also in combination with questionnaire investigation,case analysis and daily work experience in taxation,this thesis organizes concepts about tax compliance and its theoretical basis.This paper introduces the development of individual income tax in China with the characteristics and advantages of the current institution.In this context,it expounds the problems existing in the compliance of different income,and makes a deep analysis of the reasons for the low compliance from aspects of institution,collection and service.According to the reasons,measures are put forward.To be specific,all kinds of individual income groups have different degrees of non-compliance phenomenon,including: in terms of wages and salaries,many taxpayers do not understand the knowledge of individual income tax and their own tax situation,do not know how to normalize the preferential policies,and do not know the responsibility consequences of tax non-compliance,and the sense of tax gain is not obvious;Withholding agents do not fully fulfill their responsibilities as withholding agents,and they do not fully deduct the withholding personnel and items,and they do not fully provide personal income tax guidance to employees in daily work.In terms of operating income,the tax authorities’ management in most individual businesses is weak and the quality of declaration is poor,while other natural persons who have obtained business income often do not consciously declare and pay taxes.In terms of income from labor remuneration,most paying units have not realized tax withholding,and due to the high withholding rate,unconsciously taxpayers have more motivation to evade tax.High income groups such as star artists and network anchors usually evade taxes by means of yin-yang contracts and registration of shell companies.Other income aspects,such as interest,dividend,bonus income and property lease income,are also difficult to be supervised by tax authorities due to the hidden nature of the behavior.The low compliance is actually caused by taxpayers,tax authorities and even the whole society.This thesis summarizes the reasons for the problems above into three aspects.Firstly,the individual income tax institution is not perfect,which is reflected in the complicated system,the high tax burden and the insufficient intensity of special additional deduction.Secondly,the collection management is not in place,which is reflected in less attachment to natural persons,the difficulty of monitoring personal income,the low cost of illegal activities and the lack of collection talents.Thirdly,the tax payment service is not satisfying.On the one hand,tax authorities do not provide adequate services in tax law publicity,tax atmosphere creation and daily services.On the other hand,tax-related intermediary services are not normal enough.In order to enhance the compliance of individual income tax,multiple measures should be taken.This thesis puts forward countermeasures and suggestions from four aspects.Firstly,the institution can be improved by a simplified system,improved tax rates and better deductions.Secondly,the ability of collection should be strengthened by deepening the reform of tax collection.Thirdly,tax payment service is supposed to be improved in both sides of tax authority and related intermediary.Fourthly,the whole society should coordinate the governance and joint management of individual income tax,which includes: in combination with credit,strengthening the tax behavior records and credit management of natural persons and improving the cross-department joint reward and punishment mechanism;in combination with morality,taking honest tax payment as an important content of socialist moral construction,making it internalized in mind and externalized in practice;in combination with education,spreading the knowledge of taxation especially individual income tax to various teenagers.