Analysis Of The Negative Effects Of Tax Preferences

Since 1994, China has adopted a series of tax reform measures. These measures are carried out under the principle of "unified tax law, fair tax burden, simplified tax system and reasonable decentralization". The core content is the principle of fairness and efficiency. The fairness here refers to the comparison of tax burden between different taxpayers, and also the equity between domestic and foreign capital.

In addition, the fairness of the tax burden also includes equal tax treatment under the market competition condition and the relative balance of the society through tax distribution. However, the tax equity usually emphasizes horizontal equity, that is, different taxpayers have the same conditions or the same tax capacity, and their tax burden should be equal. Although the enterprise income tax law and the foreign investment enterprise and foreign enterprises income tax law are different in the tax system of the same nature and different applicable objects, they are far from the tax preference, resulting in a serious imbalance in the tax burden of domestic and foreign enterprises, and a certain resistance to their fair competition, which violates the original intention of the tax reform to achieve a fair tax burden, and also makes the domestic and foreign enterprises lose the external environment of fair competition. Thus, at the early stage of the establishment of the foreign capital enterprises, the low price competition strategy can be adopted when the products are not open to the market, giving priority to the market, while the domestic enterprises are carrying heavy tax burden and participating in the fierce market competition, which is bound to impede their rapid development. But China's current

Of course, the tax burden of foreign-invested enterprises should be considered in terms of international balance. Meng Lei, an associate professor of finance at East China University of Science and Technology, said in an interview with the international finance daily that in a specific period, the tax burden and the tax burden of domestic enterprises can not be measured on the same scale, that is, the tax burden of foreign investment enterprises can not be unified by the tax burden level of domestic enterprises. "In today's financial crisis, we can not even use the tax burden of foreign-funded enterprises to unify the tax burden of domestic enterprises. However, it is not desirable to ignore the negative impact of the two party's tax burden and ignore its negative impact on the economy. Therefore, it is imperative for the two to be unified."

For a long time, tax has always been the most important means to raise financial funds. After the implementation of "profit tax" in China's state-owned enterprises, tax revenue accounts for about 90% of the total fiscal revenue. As the main form of fiscal revenue, taxation is not only characterized by compulsion, fixity and gratuitous nature, but also can protect the national revenue. Moreover, taxation as an economic lever regulating the production and circulation of socialism plays an important role in promoting the coordinated development of the socialist market economy. However, too many preferential tax policies will definitely reduce the revenue of a certain period. At the same time, because of the more preferential tax policies and the difficulty of tax collection and management, the cost of Taxation will be greatly increased, which will increase the fiscal expenditure. This will also affect the initiative of fiscal expenditure and the improvement of comprehensive national strength.

In addition, due to Foreign businessman Preferential tax incentives for investment enterprise income tax are very complicated. There are several types of preferential measures for tax exemption and reduction, and there are preferential tax rebates for foreign investors to invest directly in advanced technology enterprises or products export enterprises. The actual enterprise income tax rates actually implemented are 30%, 24%, 15%, 10%, 7.5%, 0 and so on. In addition, the problem of compensation for the previous year's losses, the determination of the profit year and the deduction of the tax earned from overseas income have brought a lot of trouble to the tax collection and management, and also raised the cost of taxation. If some foreign enterprises do not pay taxes according to law and falsified some materials, the tax collection and management work is more difficult.

The preferential policies of taxation are closely related to attracting foreign investment. There are many preferential policies such as tax revenue enjoyed by coastal economic development and open areas, which can attract foreign capital and introduce advanced technology to a large extent. Economics The development is faster and more prosperous, and the situation in the mainland and remote areas is just the opposite. Its development lacks vitality, making the regional economic situation which has already been unbalanced become more worsen and the regional polarization is more serious. China has given large and extensive tax preferences to foreign investment enterprise income tax, sacrificing part of its tax revenue. Its purpose is to achieve greater economic, economic, technological and other interests and achieve long-term economic goals. This is understandable. Abolition of preferential treatment is not a wise move, but we must not exaggerate its efficiency and ignore its current negative effects. Practice has proved that preferential policies for foreign enterprises' income tax should pay attention to actual effect and preferential treatment should be moderate.

We know that preferential tax policy is only a factor affecting the investment environment. A good investment environment should include stable political and economic environment, good legal protection and market capacity, labor resources, foreign exchange management, material supply, service facilities, efficiency, traffic conditions, communication facilities and other factors besides low tax burden. If we ignore other factors and engage in tax incentives alone, we will never receive the expected effect of attracting foreign investment and developing the economy.