News

I. Current Status of Tax Agency Development in China

By the first half of 1999, there were over 4,100 tax agencies nationwide with nearly 100,000 employees and 26,000 certified tax agents. Approximately 9% of taxpayers use agency services - 70% single-service and 30% full-service. Service breakdown: tax filing 30%, tax audit 25%, tax advisory 18%, simple services 13%, other services 14%. Surveys show agencies achieve 100% filing rates with 97% accuracy - both higher than self-filing rates - with dispute rates under 1% vs. 1.3% for non-users. These services effectively support tax reform, creating mutual oversight between tax authorities and taxpayers.

However, China's agency usage rate remains low compared to other countries - over 85% of Japanese companies use tax accountants; about 50% of US companies and nearly 100% of individuals use agents; about 70% of Australians use agents. China's tax agency development has been relatively slow with significant untapped market potential.

II. Factors Constraining Tax Agency Development

(1) Level of Market Economy Development - Tax agencies naturally emerge in developed market economies. China's ongoing transition from planned to market economy presents challenges.

(2) Legal Tax Environment - Strong tax enforcement and penalty systems drive agency demand. Many countries impose heavy penalties on tax evasion, encouraging taxpayer use of professional services.

(3) Taxpayer Awareness - Low tax awareness and avoidance mentality in some segments reduces demand for agency services.

(4) Regulatory Framework - Compared to Japan's Tax Accountant Law, Korea's Tax Accountant Law, and US tax agency rules, China's regulations have lower legal status and weaker enforcement.

(5) Agency Operations - Issues include weak management, lack of independence, low service quality - only 18% of agency staff have bachelor's degrees, and most services are limited to basic tasks rather than high-level services like tax planning.

III. Strategies for Promoting Tax Agency Development

(1) Deepen economic reform and establish modern enterprise systems - creating more market demand.

(2) Strengthen tax collection reform and enforce strict tax compliance - expanding the client base through enforcement.

(3) Enhance public awareness through education - building tax and agency awareness.

(4) Improve regulatory framework and management - developing comprehensive operating standards.

(5) Strengthen internal management and improve service quality - providing high-level, high-quality professional services.

Recommendations for statutory agency services: tax reduction/refund applications, tax deferral applications, general taxpayer qualification, land value-added tax declarations, and annual income tax filings should require certified tax agent verification.