Tax targets

Liu Tianyong is a tax lawyer and director of Hwuason Law Firm in Beijing. He is also executive director of the Fiscal Law and Tax Law Association

Recently, the Ministry of Finance published national public financial data for the first quarter of 2012. National fiscal revenue showed an increase of 14.7%, with the growth rate falling by 18.4 percentage points compared to the same period last year (33.1%). Tax revenue showed an increase of 10.3%, compared to a gain of 32.4% in the same period last year – the lowest in the past three years.

With the backdrop of a domestic economic growth plunge, tax authorities will be taking more stringent measures to intensify their inspection efforts for the purpose of completing the annual taxation task.

In accordance with Major Points of 2012 National Taxation Inspection (JiBianHan [2012] No. 1), capital transactions hit the list of mandatory items for taxation special inspection. Therefore, mergers and acquisitions (M&A) and restructuring of enterprises, as one of the significant ways of capital operation and a key target of taxation inspection, will be confronted with a serious taxation inspection risk.