This year's legislative plan was announced: the individual tax and real estate tax laws were not mentioned, and the main play was value-added tax and tariff legislation

Recently, the Standing Committee of the National People's Congress and the State Council have successively released the 2023 legislative work plan, and in the area of taxation, the value-added tax law and tariff law have become the focus of legislation this year, while the revision of the individual income tax law and the real estate tax legislation, which have attracted much attention, have not been covered.

On the 6th, the General Office of the State Council made public the State Council's 2023 legislative work plan, specifying that this year it will be submitted to the Standing Committee of the National People's Congress for deliberation on the draft tariff law. It is prepared to submit to the Standing Committee of the National People's Congress for deliberation the draft consumption tax law and the draft amendment to the tax collection and management law.

Earlier, the 2023 legislative work plan released by the Standing Committee of the National People's Congress showed that the value-added tax law was reviewed for the second time in August this year, and the tariff law and other tax laws were reviewed for the first time.

Shi Zhengwen, director of the Finance and Taxation Law Research Center of China University of Political Science and Law, told First Finance and Economics that this year is the first year that the 14th National People's Congress and its Standing Committee have performed their duties in accordance with the law, and a number of important tax laws will be deliberated or prepared for deliberation this year, reflecting that the current NPC attaches great importance to tax legislation. This year's tax legislation focuses on the second instance of the VAT Law and the first instance of the Customs Law, and the first major type of VAT legislation is expected to be passed this year at the earliest. Considering the economic and social situation this year, the legislative plan does not mention the revision of the IIT Law and the Real Estate Tax Law, which means that the IIT reform and real estate tax reform pilot projects should not be promoted this year.

VAT and customs legislation are the main plays

In order to implement the statutory principle of taxation, China has accelerated the process of tax legislation in recent years, and 12 of the 18 taxes have completed the legislative task, and the remaining value-added tax, customs duties, real estate taxes, etc. have become "difficult bones" in tax legislation. The first major tax, the value-added tax law, was first submitted to the people's congress for deliberation at the end of last year, and according to the legislative work plan, a second reading will be held in August this year.

Wang Huayu, deputy director of the Finance and Taxation Law Research Center of Shanghai Jiao Tong University, told First Finance and Economics that the first draft of the VAT Law mainly follows the principle of shifting the tax system, basically continues the provisions of the current VAT interim regulations and related policies, and makes optimized provisions in the definition of taxable acts, the summary of the scope of taxation, the understanding of deemed sales, the induction of mixed sales, the simplification of the tax calculation period, etc., and may make some necessary adjustments in individual provisions and expressions after soliciting comments. VAT legislation could be passed as soon as this year.

Shi Zhengwen said that value-added tax is the highlight of tax legislation, because it is the first major tax, involving all aspects of economic life, and the society is very concerned. VAT legislation is of great significance to the establishment of a modern value-added tax system, promoting high-quality economic development, and ensuring national fiscal revenue.

After soliciting public comments on the draft VAT law at the end of last year, the National People's Congress received more than 400 comments in April this year. Zang Tiewei, spokesman of the Legislative Affairs Commission of the Standing Committee of the National People's Congress, summarized these opinions and mainly focused on four aspects: first, improve the scope of VAT taxation; Second, further optimize the tax rate structure; Third, standardize legislative authorization and further clarify relevant provisions; Fourth, it is necessary to do a good job in connection with the current value-added tax policy provisions.

Shi Zhengwen said that on the whole, the VAT legislation has followed the shift of the tax system, maintained the continuous and stable policy, the legislative conditions are mature, and a consensus can basically be reached, and it is expected to be passed as soon as this year. Of course, there are also some controversies in the current VAT legislation, some laws themselves can be further improved, and some need to be left for later reforms.

"For example, in terms of optimizing the tax rate structure, the VAT rate is three and two levels is a general direction, but this legislation will not complete this reform, and the tax rate will maintain the status quo." Because the economic recovery after the epidemic this year still faces many challenges, and the adjustment of the VAT rate involves a lot of issues, it should be stable at present, so it will not simplify the tax rate, but a reform direction in the future. Shi Zhengwen said.

In addition, he said that some of the current authorization provisions in the VAT law are too broad and should be appropriately restricted and regulated.

Shi Zhengwen believes that with the rapid advancement of VAT legislation, the implementation regulations of the VAT Law being drafted will also be revised and improved, clarifying the relevant policy details in the law to provide guarantee for the implementation of the VAT Law in the future.

According to data from the Ministry of Finance, value-added tax is the largest tax in the mainland, with national value-added tax revenue of 6,198.2 billion yuan in 2021, accounting for 36% of the national tax revenue. In 2022, VAT revenue declined significantly due to the impact of large-scale retained tax refunds, and with the reduction of this factor, VAT revenue showed a recovery growth this year. In the first four months of this year, the domestic value-added tax was 2,792.3 billion yuan, a year-on-year increase of 58%.

The tariff law is also a major focus of this year's tax legislation. Although the scale of tariff revenue (286 billion yuan last year) is significantly smaller than VAT, because tariffs are an important tax for the state to regulate import and export trade, legislation has also attracted much attention in the current global trade frictions.

Shi Zhengwen said that the tariff legislation is actually not much reformed, and in the context of trade frictions in previous years, the legislation is more prudent. In addition, tariff legislation involves coordination among multiple departments, coordination with the Customs Law, and the division of tariff authority between the National People's Congress and the State Council. In order to give full play to the special function of flexible tariff adjustment, it is expected that in the future, the Tariff Law will give the State Council considerable authority to adjust tariff rules, etc., which is also an international practice.

In addition to the above-mentioned two tax laws under review, the draft consumption tax law and the draft amendment to the tax collection and administration law are included as preliminary items for deliberation. Shi Zhengwen believes that the preliminary review is generally unlikely to enter the deliberation, and it is expected that the two tax laws are unlikely to be reviewed this year.

However, related work such as consumption tax legislation is still advancing. For example, in May this year, Liu Xiuwen, deputy director of the Budget Work Committee of the Standing Committee of the National People's Congress, led a research team to Liaoning and Zhejiang to conduct special research on consumption tax legislation and reform.

Wang Huayu said that the revision of the Tax Collection and Administration Law mainly involves background factors such as the domestic and foreign economic situation, the impact of major adjustments to relevant provisions on actual collection and management, and the progress of smart tax construction, which have been suspended since the epidemic, but considering that the modern tax system must include a modern tax collection and management system, the revision of the Tax Collection and Administration Law will still choose the opportunity to promote the process of amending the law, and the general direction of the revision of the Tax Collection and Administration Law is to fully protect the rights of taxpayers, appropriately restrict the power of tax authorities, improve tax collection and management and service performance, and adapt to smart tax construction. The development of digital economy and the advanced experience of international tax collection and administration, this general direction will not change.

There will be no reform of personal tax and real estate tax this year

Individual tax and real estate tax are taxes that have attracted much attention in the market. Among them, the official has made it clear that the personal income tax should be further reformed.

This year's central and local budget reports, when talking about the focus of this year's fiscal reform, clearly stated that it will study and optimize the scope of comprehensive income taxation of individual income tax and improve the special additional deduction items.

Earlier, a number of financial and tax experts told First Finance and Economics that this means that China will carry out a new round of individual tax reform. Under the goal of common prosperity, China needs to give full play to the adjustment effect of income distribution of individual tax, so it needs to gradually expand the scope of comprehensive income, and which income categories are included is the focus of further research. In addition, with the economic and social development, the six special additional deduction standards and deduction methods introduced in 2019 can also be further improved, better reflecting the principle of affordability.

In accordance with the statutory principle of taxation, the above-mentioned IIT reform needs to amend the IIT Law. This year's IIT Law was not included in the NPC's deliberation item.

Shi said that this means that it is unlikely to introduce personal tax reform this year. This year is the first year after the epidemic, the economy is still recovering, and the IIT reform involves many natural person taxpayers, which has a great impact, so this year is mainly to strengthen research.

"At present, although there is room for further optimization of the IIT Law, the extremely urgent necessity is not obvious, and the main thing in the near future is to further strengthen the collection and management of IIT." Wang Huayu said.

In terms of the real estate tax law, which has attracted much attention, the budget work committee of the Standing Committee of the National People's Congress and the Ministry of Finance organized and drafted it, but because the real estate market varies greatly across the country and the actual situation is very complicated, the real estate tax legislation needs to be gradually and steadily advanced. In fact, except for the 2015 Legislative Work Plan of the Standing Committee of the National People's Congress that explicitly mentions the Real Estate Tax Law as a preparatory project, the relevant legislative work plans in recent years have not mentioned real estate tax.

Shi Zhengwen said that the current downward pressure on the real estate market is still large, and real estate tax legislation or pilot will undoubtedly have an impact on house prices, so under the current circumstances, the real estate tax pilot will not be carried out this year. In the long run, with the economic and social development, the real estate tax pilot and legislation will still be steadily advanced, which is conducive to guiding the reasonable consumption of housing, supporting "housing instead of speculation", and promoting the construction of local tax systems, increasing the proportion of direct taxes, and promoting the modernization of national governance.

Wang Huayu said that the timing of real estate tax legislation is closely related to the economic environment and market expectations, and the current development of the real estate market is in a relatively cold and slowing stage, and the short-term urgency of accelerating the promotion of real estate tax legislation or pilot work is not obvious, but in the medium and long term, it will still maintain the possibility of accelerating in a timely manner.