After the State Council issued a larger tax and fee reduction
Reforms to Adjust Central and Local Income Division
Notice of promotion plan
Guofa 〔2019〕 No. 21
People's governments of provinces, autonomous regions, and municipalities directly under the Central Government, ministries and commissions of the State Council, and agencies directly under the Central Government:
We hereby publish to you the "Promotion Plan for Adjusting the Reform of the Central and Local Revenue Division after Implementing Large-scale Tax and Fee Reductions", please implement it carefully.
September 26, 2019
(This is publicly available)
Adjustments after implementation of larger tax and fee reductions
Central and local income division reform and promotion plan
In order to further streamline the fiscal distribution relationship between the central and local governments, support local governments in implementing tax and fee reduction policies, and alleviate financial operational difficulties, in accordance with the decision of the Party Central Committee and the State Council, we will now adjust central and local revenues after implementing larger tax and fee reductions. The division reform is formulated as follows.
I. Basic principles
(1) Maintain the overall stability of the existing financial structure. Mobilize the enthusiasm of the central and local governments, stabilize the overall pattern of central and local revenue divisions that have been formed since the reform of the tax-sharing system, and consolidate the results of income division reforms such as the "Five-Five-Year Sharing" of VAT.
(2) Establish a more balanced and reasonable sharing mechanism. In accordance with the requirements of deepening the reform of value-added tax and establishing a tax-refund system, on the basis of keeping the central and local share of the tax-refund ratio unchanged, rationally adjust and optimize the sharing method between localities.
(3) Steady progress was made in reforming the local tax system. Adjust and improve the local taxation system in a timely manner, cultivate and expand the sources of local taxation and taxation, use some mature central taxation types as local income, and strengthen local capacity to respond to larger-scale tax and fee reductions.
2. Major reform measures
(1) Maintain the "Five-Five-Year Sharing" ratio of VAT. "Notice of the State Council on Printing and Distributing the Transition Plan for Adjusting the Central and Local VAT Revenue Division after the Pilot Implementation of the Business Reform and Increase Pilot Program" (Guo Fa  No. 26) Determined to Continue to maintain VAT after the 2-3 year transition period expires The “Five-Five-Year Sharing” ratio of income distribution remains the same, that is, 50% of VAT is shared by the central government and 50% of the VAT is shared by local governments. To further stabilize social expectations, guide localities to develop advantageous industries according to local conditions, encourage localities to cultivate and expand tax sources in economic development, strengthen local financial "blood-making" functions, and create an environment that is proactive, competitive and practical.
(2) Adjust and improve the sharing mechanism of VAT retention and refund. Establish a long-term mechanism for VAT rebates, and determine the scale of tax rebates based on the fiscal revenue situation, and keep the central and local "Five-Year" sharing ratio unchanged. In order to alleviate the pressure of tax rebate in some areas, the portion of the local VAT refund (50%) will be adjusted from the full burden of the company's location (50%) to the first burden of 15%, and the remaining 35% will be paid in advance by the company's location. Then, the local governments will share the balance of the value-added tax share of the previous year, and the central bank will transfer the provincial financial department of the enterprise to the local government on a monthly basis. Reasonably determine the sub-provincial tax rebate sharing mechanism and effectively reduce the fiscal pressure on the grassroots. Specific measures will be studied and formulated by the Ministry of Finance.
(3) Move backward the consumption tax collection link and steadily plan the place. In accordance with the requirements of a sound local tax system reform, and under the premise of controllable collection, the current consumption tax items collected in the production (import) link will be gradually moved to the wholesale or retail link for collection, expanding local sources of income, and guiding the local to improve the consumption environment. The specific adjustment items have been fully demonstrated and implemented steadily after being submitted for approval one by one. The reform of high-quality watches, precious jewellery, jewellery and jade is implemented first, and the reform of other eligible items is carried out in combination with the consumption tax legislation. The basic part of the reform and adjustment of the stock is verified by the local authorities, and the incremental part will, in principle, belong to the local governments to ensure the stable financial structure of the central and local governments. Specific measures shall be studied and formulated by the Ministry of Finance in conjunction with the State Administration of Taxation and other departments.
(1) Strengthen organizational leadership. The Ministry of Finance must strengthen the organization and coordination of the reform of the division of income between the central and local governments, and work hard to formulate specific implementation measures. Provincial people's governments should further establish and improve the coordination mechanism for the reform of the division of revenue between the central and local governments in accordance with local conditions, clarify the division of responsibilities, strengthen coordination and coordination, and supervise and guide their departments and cities and counties within their jurisdictions to implement them in a comprehensive manner. The relevant departments of the State Council shall cooperate fully with the reform and assist in tracking and monitoring the implementation of reforms in various regions and industries.
(2) Serious financial brokerage laws. The Ministry of Finance must carefully review and strictly check with the relevant departments to prevent some localities from artificially intervening in taxation and making surprise bases. All regions should advance reforms in accordance with the requirements of this plan, seriously investigate and deal with violations such as interference in business operations, distribution of tax sources, and protection of local markets, and prevent illegal policy depressions for short-term and local benefits. Tax authorities at all levels must do a good job of tax collection and management after the reform, severely crack down on false invoices and tax evasion, and resolutely plug the loopholes in tax collection and management.
(3) Promote supporting reforms. After the reform measures for the division of central and local income determined in this plan are in place, the people's governments of provinces, autonomous regions, municipalities and cities with separate plans shall further reform and improve the fiscal management system below the province in accordance with local conditions, and rationalize the division of income between governments at all levels below the province Relations, balance financial resources between sub-provincial regions, and promote equalization of basic public services.
The implementation of larger scale tax and fee reductions is a key move to cope with the current downward pressure on the economy. Adjusting the reform of the central and local income divisions is an important guarantee for implementing tax and fee reduction policies. All regions and departments should be more closely united around the Party Central Committee with Comrade Xi Jinping as the core, adhere to the guidance of Xi Jinping's new era of socialist characteristics with Chinese characteristics, and strengthen the "four consciousness", firm "four confidence", "Two maintenances", do a good job in the implementation of this plan, establish clear central authority and responsibility, financial coordination, regional balance of central and local fiscal relations, create conditions for the implementation of tax and fee reduction policies, and ensure that enterprises and the people The sense of gain has laid a decisive foundation for the completion of a well-off society, and celebrated the 70th anniversary of the founding of the People's Republic of China with outstanding achievements.