Beijing, Tianjin and Hebei sign tax cooperation agreement
Move seen as part of an effort launched by Xi to create an integrated megalopolis
Taxation departments in Beijing, Tianjin and Hebei have signed an agreement in response to the central leadership’s push for an integrated megalopolis, state media reported.
Tax cooperation among the three regions, usually called Jing-Jin-Ji as a whole, means a big step forward for the ambitious project launched by President Xi Jinping, observers said.
“The driving force for Jing-Jin-Ji integration lies in an interest-sharing mechanism, of which tax is an important part,” the Economic Information, a newspaper run by Xinhua, quoted Liu Bo, deputy director of Beijing’s Development and Reform Commission, as saying.
It said the agreement includes collaboration in nine areas, varying from tax collection, taxpayer services to research and development.
Under the plan, tax-paying platforms will be unified, and tax departments of the three regions will recognise each other’s professional qualifications, assist the others in collecting taxes and share information, the State Administration of Taxation’s chief accountant Fan Jian reportedly said at a meeting on Wednesday when the agreement was signed.
With a number of industries such as garment making and furniture manufacturing in Beijing moving to Hebei province to ease pressure caused by the large population and choking air pollution, sharing tax revenue has become a controversial issue.
The State Administration of Taxation (SAT) is organising the three regions to calculate the impact of the potentially massive relocation, the newspaper report said.
Integration of Jing-Jin-Ji was put onto agenda when Xi chaired a meeting focusing on it in February. It was also written into Premier Li Keqiang’s government work report the following month.
Wang Chaocai, deputy director of the Research Institute for Fiscal Science under the Ministry of Finance, said tax cooperation among cities can also be meaningful in helping businesses with possibly excessive tax burdens.
“Many companies who are headquartered in Beijing but have their production bases in Hebei or Tianjin are facing the risk of double tax because of unconnected tax systems among the regions,” he said. “So the cooperation is releasing enterprises from worries in this regard."
“Of course the SAT would also be happy because they need not collect information from them one by one,” Wang added.
Ye Qing, a professor at Zhongnan University of Economics and Law, said Jing-Jin-Ji has taken the lead in integrating tax systems on the mainland, and it is worth expanding to the Yangtse River Delta and Pearl River Delta.
“Consistent tax policies in the areas would be necessary for integration,” he said. “For example, Beijing is setting up a branch of its Zhongguancun hi-tech zone in Tianjin. Some favourable tax conditions that Beijing has offered should also be applied in Tianjin in order to attract companies.”
The three cities differ greatly in their tax policies and overall economic power. Both Beijing and Tianjin have preferential tax policies in their flagship hi-tech zones, but Hebei doesn’t.
According to official data, though Hebei is much bigger than the other two in size, its gross domestic production per person accounts for only 41 per cent of Beijing’s and 38 per cent of Tianjian’s.
