The Shanghai municipal government's revenue jumped 31.38 percent to 210.06 billion yuan ($27 billion) last year, thanks to the increase in corporate earnings and continuous economic growth.
Income tax generated by companies and individuals rose 53.13 percent and 29.3 percent, while business tax increased 27.91 percent, according to Shanghai municipal taxation department figures.
"The large increase in foreign trade and domestic demand led to the rapid growth of corporate earnings," Orient Securities analyst Zhang Yang said.
"The implementation of higher-income earners reporting system, too, helped increase the revenue," Zhang said. Starting from last year, people earning more than 120,000 yuan ($16,500) a year need to report their income to the tax authorities directly.
Managing partner of Deloitte tax consultants in East China Jiang Ying said the booming property investment and stock markets combined to push up individual income.
A new corporate income tax, which imposes a unified 25 percent tax on foreign and domestic companies, took effect from January 1 this year. The burden on Chinese companies, earlier subjected to a statutory income tax of 33 percent, has been eased, while foreign enterprises, which used to pay less than 25 percent tax, will have to fish out more.
"The unified corporate tax won't have a negative impact on tax revenue because the increasing annual corporate earnings will offset the temporary fall in tax revenue," Jiang said.
Source: China Daily
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