Preventing Foreigners Evading Individual Income Tax through Tax Assessment

1、preventing foreigners evading individual income tax through tax assessmentsubmitted by zhao jinstudent id number 081011010072supervised by liu you daoa paper submitted in partial fulfillment of the requirements of the degree of bachelor of artsthe institute of online educationbeijing foreign studies

2、 university15北京外国语大学网络教育学院学士学位论文诚信声明本人郑重声明：所呈交的学士学位论文，是本人在导师的指导下，独立进行研究工作所取得的成果。论文所涉及的项目为本人亲自负责或者参与实施的项目。除文中已经注明引用的内容外，本论文不含任何其他个人或集体已经发表或撰写过的作品成果。本人完全了解本声明的法律结果由本人承担。学士学位论文作者签名：赵瑾 日期：2011年 05 月30日摘 要北京市地方税务局涉外分局主要负责本市外国企业常驻代表机构和外籍个人地方税种的征收管理工作。随着我国开放程度的提高和投资环境的优化，越来越多的外资进驻北京。外籍个人所得税呈现出前所未有的增长趋势，同时偷

3、漏税的比例也居高不下。在此情况下税务机关如何加强监管、堵塞税款漏洞，成为亟待解决的问题。我们首先对税收管理员工作中的难点及需求进行卷调查。结果显示，难点集中在以下几个方面：外籍个人对于中国税法了解不够、税务机关不易掌握外籍个人出入境记录、外籍个人收入组成复杂不易监控、对偷漏税的外籍个人缺乏出入境限制手段。89%的税收管理员认为开展纳税评估将对控制偷漏税起到一定作用。基于相关税收政策以及职能部门间合作、监督机制等理论和实践，本文提出假设，认为外籍个人对中国税法的理解程度、税务机关对外籍个人相关信息的掌握程度以及打击违法行为的力度与偷漏税发生的比例直接相关。通过纳税评估，力图达到把偷漏税的比例降低

4、至10%以下的目的。北京市地方税务局涉外分局于2010年10月11日至12月3日对税款所属期2008年1月至2010年6月的个人所得税进行纳税评估。此次纳税评估的对象为来自2673家外国驻京代表机构的3859名兼职外籍个人。在评估过程中运用了swot分析法，全体税收管理员40人分为三个组，经过自查、复查和阻止出境三个阶段实施评估。首先，纳税人自查阶段，管理员对代表处财务进行了培训，提高了财务人员对税法的掌握程度。然后，在复查阶段，地税局与出入境管理局、银行建立查询机制，查询外籍个人的出入境记录及银行转账记录，再根据这些信息对个人所得税进行复查。最后，我们与出入境管理局建立联动机制，阻止5名拒不

5、补缴税款的外籍个人出境。经过此次纳税评估共发现1307名外籍个人存在少缴个人所得税的情况，补缴税款共计1642万元。需要说明的是：出于税收信息保密的考虑，本文中提及的补税人数和查补税款金额经过了技术处理。为了检验该次纳税评估的效果，我们在2011年5月对兼职外籍个人的纳税情况进行了抽查，抽查结果显示偷漏税人数比例由此次评估的33.9%下降到9.6%。此次评估，收到了良好的效果，对于普及税法、拓宽税务机关获取信息途径、打击违法行为起到了十分积极的作用。关键词：外籍个人所得税；纳税评估；地税局；打击偷漏税abstractforeign branch of beijing local taxatio

6、n bureau is in charge of the tax collection of foreign representative offices and foreign individuals. with the reform and opening-up of china, more and more multinational corporations settled in china. accordingly the status that foreigners individual income tax (hereinafter abbreviated as iit) occ

7、upies in chinas tax system has become much more important than before. how to prevent foreigners from evading iit became a big challenge to taxation bureau and tax collectors.to achieve the goal of preventing tax evasion, our objectives would be to improve policy explanation of iit, to set up cooper

8、ation systems among taxation bureau, exit-entry administration bureau and certain commercial banks and to adopt strict measures to guarantee the law enforcement once one tax evasion case was verified. it was hypothesized that doing tax assessment would help to prevent foreigners iit evasion and ensu

9、re all tax that should be collected is collected. it was estimated that by doing this tax assessment the number of iit evaders would drop from 30 to below 10 percent.the tax assessment project was implemented from october 11th 2010 to december 3rd 2010. 40 tax collectors were engaged in the project

10、and 3859 foreign taxpayers who held positions both in china and abroad were chosen as the assessment targets. the tax assessment covered the tax duration from january 2008 to june 2010. the tax assessment project was divided into three phases: in phase i the taxation bureau made the iit policy expla

11、nation to the taxpayers and then they checked their iit by themselves. in phase ii the tax collectors rechecked the iit tax based on the exit-entry records and bank records checked. in phase iii the taxation bureau notified the exit-entry administration bureau to prohibit the tax evaders from leave

12、china. during the tax assessment we found 1307 foreigners who have committed iit evasions. the iit they paid back amounted to 16.42 million rmb yuan. to verify the effect of this tax assessment we chose some random samples to recheck their iit. the result showed the percentage of tax evaders dropped

13、 from 33.9% to below 10%.key words: foreign iit; tax assessment; taxation bureau; tax evasiontable of contentspages1.project introduction 12. project problem identifications and analysis3 2.1 project problem3 2.2 problem analysis4 2.2.1 current situation of foreign branch 4 2.2.2 needs and wants ana

14、lysis6 2.2.3 swot analysis73. project objectives and hypothesis8 3.1 project objective8 3.2 project hypothesis94. project rationale95. project design 11 5.1 planning of activities11 5.1.1 activities planned to take place11 5.1.2 critical path of the planned activities12 5.1.3 time-scale of activitie

15、s13 5.1.4 people involved and their responsibilities16 5.2 cost analysis17 5.3 risk analysis18 5.3.1 the potential risks analysis19 5.3.2 protective measures to be taken196. project implementation20 6.1. general introduction 206.2 results of the questionnaire of foreigners iit levy206.3 results of t

16、est for all accountants226.4 effect of inter-institutional consultations23 6.4.1 consultations with exit-entry administration24 6.4.2 consultations with commercial banks256.5 tax evaders found in the tax assessment project257. results and discussion268. conclusion27bibliography30appendix i. 外籍个人所得税常

17、见问题调查表31appendix ii. the exit-entry record33appendix iii. 涉外代表处办税人员个人所得税知识测试34preventing foreigners evading individual income tax through tax assessment1. introductionthe foreign branch of beijing local taxation bureau (hereinafter referred to as “foreign branch”) was founded in 2002. it consists of

18、 7 sections with 80 qualified government employees. among the staff 40 are tax collectors responsible for collection and administration of taxes of foreign representative offices in beijing. in our daily work, individual income tax (hereinafter abbreviated as iit) levy on 3859 foreign taxpayers who

19、hold positions both in china and abroad is the most difficult task for us to carry out.in order to improve the effectiveness of iit levy, particularly to find an effective way in countering iit evasion, the directorate of the foreign branch selected 9 experienced tax collectors to form three teams.

20、as a tax collector working in the foreign branch for nine years, i was chosen as head of team c. for this reason, i decided to use tax assessment on the above-mentioned foreign taxpayers as the subject for the present practical business project design. with the help of legal affairs section of the f

21、oreign branch, we designed a questionnaire to find out the existing problems. the scientific analytic methods such as swot analysis were also used.based on needs analysis and swot analysis, we hypothesized that tax evasion of foreigners was related to taxpayers lack of knowledge in the field of chin

22、ese iit policy, as well as to tax collectors lack of knowledge on key information of taxpayers and means of law enforcement. thus a well planned and implemented tax assessment could help to solve the problems. the objectives of this project were to improve policy explanation of laws and regulations

23、in the field of chinese iit to the foreign taxpayers; to set up cooperation systems among taxation bureau, exit-entry administration bureau and certain commercial banks, with view to obtain and update key personal data of foreign taxpayers, such as the time they stayed in china and the income they e

24、arned during that period; and to adopt strict measures to guarantee the law enforcement once one tax evasion case was verified, such as to prohibit the tax evaders from leaving china. we estimated that by doing this tax assessment the number of iit evaders would drop from 30 to below 10 percent.this

25、 paper is divided into eight chapters. we adopted the method of sample investigation to collect typical samples as the object of our analysis. furthermore, inspired by modern training theory, we added q&a with taxpayers both in face-to-face form and online, in order to improve the effectiveness of i

26、it policy explanation. as zhang c.f., expert in public administration, said, electronic government has become options of more and more governments to build an open, responsive, responsible and efficient government (zhang c.f. & dang x.y., 2001: 350). inspired by “digital beijing project”, which made

27、 information sharing among the taxation, finance, border control authorities and commercial banks a reality, we managed to establish consultation systems both with exit-entry administration bureau and with certain commercial banks during the research. as foreign taxpayers were in huge number, we ado

28、pted the method of sample investigation to collect typical samples as the object of our analysis. the project was designed and implemented from october 11th 2010 to november 3rd 2010. all activities were checked according to time-scale and critical path plan during execution and only a few tasks suf

29、fered necessary adjustment. as the results demonstrated, the research methods used were feasible, the implementation was effective and the objectives were realistic. in conclusion, the project had proved its hypothesis, achieved its goal and objectives and therefore was a successful one.2. problem i

30、dentification and analysis2.1 project problemas a tax collector, i have worked in the foreign branch of beijing local taxation bureau for nine years, being in charge of the iit collection from foreigners who work in beijing. with the rapid increase of foreign investment in recent years, the number o

31、f foreigners working in beijing has grown rapidly. in our daily work, tax levy on foreign taxpayers who hold positions both in china and abroad is the most difficult task for us to carry out. so i decided to use the situation as the subject for the present practical business project design.the chine

32、se government has promulgated a series of laws and regulations concerning iit, which provide us a strong policy basis. the government employees in foreign branch are specialized and knowledgeable. however, due to some unique characteristics born by foreign taxpayers, such as the cultural differences

33、, their rapid flows, earnings both in china and overseas etc., it constitutes a daily challenge and sometimes a severe problem for tax collectors like me to prevent foreigners from evading paying tax.in order to solve this problem, effective measures, known academically as tax assessment（纳税评估）, must

34、 be taken to regulate the iit paying actions of all foreign taxpayers who hold positions both in china and abroad. there are three approaches for taxation bureau to use in tax assessment process: firstly, to fully inform foreign taxpayers of chinese laws and regulations on iit; secondly, to grasp an

35、d verify information of the taxpayers, especially how long they stay in china and how much they earn during this period and thirdly, to impose strict border control towards certain foreign tax-payers when necessary. it is assumed such tax assessment helps to decrease tax evasion.2.2 problem analysis

36、2.2.1 current situation of foreign branch1) internal factors a. physical resourcesthe foreign branch of beijing local taxation bureau was founded in 2002. its main responsibilities are: firstly, to organize the collection and administration of taxes of foreign representative offices in beijing, incl

37、uding business tax, individual income tax, urban and rural land usage tax and so on; secondly, to supervise and check up the tax liabilities of each taxpayer and punish those actions concerning the breach of tax laws, rules and regulations by executive means; thirdly, to organize and guide the popul

38、arization of tax laws and offer consultation on tax policies and provide taxation services.b. human resourcesthe foreign branch of local taxation bureau has 80 qualified government employees working in 7 sections. among them there are 40 tax collectors, 90% of them with bachelors degree and 10% of t

39、hem with masters degree. the average age of the tax collectors is 35. so the group is young and energetic.c. information resources foreign branch takes the responsibility of administrating the local tax revenue of 5681 foreign representative offices in beijing. the foreign representative offices hav

40、e both chinese and foreign employees. in total, there are 6754 foreign individuals paying iit in our branch. among all the foreign individuals there are 3859 foreign taxpayers who hold positions both in china and abroad. they come from 2673 foreign representative offices. in the project we chose the

41、 3859 foreign taxpayers to hold the tax assessment. according to the tax laws, the foreign representative offices must withhold (代扣代缴) iit of their employees. thats to say, in the tax assessment process tax collectors carried out the tax assessment with 2673 accountants instead of directly with fore

42、ign individuals.d. financial resources the funding of foreign branch comes from finance allocation（财政拨款）. once the director of foreign branch approves the budget of certain tax assessment project, all reasonable costs occurred during the project implementation will be refunded by the office of finan

43、cial affairs using the finance allocation. 2) external factors with over 30 years of reform and opening-up, china has achieved rapid development in its economic and social fields. in 2010 chinas gdp reached $5.88 trillion and overtook japan to become the worlds second largest economy. china held bei

44、jing olympic games, shanghai world expo and guangzhou asian games successfully, making the country more influential and attractive in the world. thus more and more multinational corporations decide to settle in china, which in consequence contributes to technological innovation and increase in both

45、employment and fiscal revenue. on the basis of the latest statistics, iit has become chinas first four major types of taxes. accordingly the status that foreigners iit occupies in chinas tax system has become much more important than before.as a result, taxation bureau is facing both opportunities a

46、nd challenges. on one hand, introduction of new technologies, especially the development of e-governance, helps to improve taxpayers consciousness of paying tax, as well as to make the tax levy procedure easier and more effective. on the other hand, with the rapid and profound changes taking place o

47、n foreign taxpayers, such as diversified nationalities and professions, etc., the risk of tax evasion has also increased with each passing day. so it is urgent and necessary for the taxation bureau to take the action of tax assessment to prevent foreigners from evading tax. otherwise, tax loss would

48、 turn into an inevitable phenomenon. 2.2.2 needs and wants analysis a research project looking for methods to prevent foreigners from evading iit must narrow the research problem through a need analysis of the tax collectors. the goal was to find out what were the main problems and difficulties the

49、tax collectors face in preventing foreigners iit evasion. first, a questionnaire was designed covering major important aspects in tax levy. then the forms were distributed to all 40 tax collectors of the branch. all these forms were to be returned to the legal affairs section of the foreign branch i

50、n a week, where they would be analyzed.the analysis results showed that the problems to be solved focused on the following points: first, all surveyed tax collectors pointed out that a great number of accountants knew little about chinese laws and regulations in the field of iit; second, many tax co

51、llectors felt difficult in obtaining and updating key personal data of foreign taxpayers, such as the time they stayed in china and the income they gained during that period; third, tax collectors lacked restrictive means in preventing foreigners from eventual tax evasion.2.2.3 swot analysisbased on

52、 the results of situation analysis and needs analysis, i came up with the following swot profile:strengthsweaknesses young, energetic, and knowledgeable staff strong policy support wide use of e-governance effective message exchange inside the taxation bureau loss of tax revenue due to tax evasion c

53、ompared with increasing number of taxpayers, the tax collectors are not enough outdated management poor message exchange between the taxation bureau and other government entitiesopportunitiesthreats investment of multinational corporations taxpayers have strong consciousness to pay tax tax assessmen

54、t will bring increase in tax revenue support from senior leadership frequent flows of foreign taxpayers complex components of foreigners income some accountants lack overall knowledge about chinas tax laws, regulations and policiesthe ultimate goal of foreign branch of taxation was to overcome the f

55、irst weakness, namely to prevent tax evasion. to achieve this goal, our branch needed to deal appropriately with all our weaknesses as well as some threats. if we could make good use of our strengths, grasp some golden opportunities, find ways to dissolve the threats and overcome our weakness, our g

56、oal would be achieved.3. project objective and hypothesis3.1 project objectivethe problem was that tax evasion of the foreign taxpayers who worked both in china and abroad happened now and then. our goal was to prevent all kinds of tax evasion and ensure all iit that should be collected was collected. to achieve this goal, our objectives would be to improve policy explanation of laws and regulations in the field of chinese iit to the foreign taxpayers; to set up cooperation systems among taxation bureau, exit-entry administration bur