Time to get tough on tax offenders
The Chinese government has levied a $140 million fine on Microsoft Corp for cross-border tax evasion, Reuters reported Tuesday, citing an article by the Xinhua News Agency which referred to a company identified only as “M.” Chinese subsidiaries of Microsoft will also pay taxes amounting to 100 million yuan ($16.28 million) annually in the future, Reuters reported.
China has lost out on a wealth of fiscal revenue from multinational enterprises skilled in the art of minimizing their tax burdens. The fact that China lacks effective tax-avoidance rules hasn’t helped matters. In fact, data show that the US levied over $100 billion in overdue taxes back in 2008, while China collected just $700 million.
Despite such shortcomings, China has made some recent progress in cracking down on tax evaders. Anti-tax evasion measures contributed 46.9 billion yuan to State coffers in 2013, compared with just 460 million yuan netted from offenders in 2005.
More must be done though to prevent multinational corporations from shirking their tax obligations in China. Stronger laws and regulations pertaining to taxation should be implemented. More study should also be devoted to the issue of tax avoidance, with relevant content added to business and law school curricula.
