Fraud – Chinese look to foreign experts for help

Multibillion-pound tax losses have forced the Chinese government to turn to international tax experts in an attempt to crack down on fraud and evasion.

The two-year programme, backed by the World Bank, will see Deloitte & Touche advise on modernising the tax system. It aims to enhance economic development in China and look into the feasibility of new taxes. It will also put forward a framework for a future tax system, including VAT and environmental, income and local taxes.

China’s State Council has launched several crackdowns on tax evasion and fraud in recent years and Lou Ji Wei, first vice-minister of the ministry of finance, said Deloitte’s work would ‘improve the MoF’s effectiveness in increasing revenue’.

Daisy Yip, Grant Thornton’s Hong Kong-based China tax manager, said China only set up a tax system in the 1980s and this – together with the vastness of the country and a shortage of tax officers – made collection very difficult.

Related reading