29 Nov 2016
Tax and Foreign Exchange Authorities to Step up Joint Monitoring Efforts
The State Administration of Taxation (SAT) and State Administration of Foreign Exchange (SAFE) signed a memorandum of co-operation in Beijing on 14 November, pledging to step up joint monitoring efforts through information sharing. It is hoped that joint incentives and joint punishments can be carried out to further promote foreign trade growth by stepping up information sharing and continuously improving on-going and ex-post supervision.
The two authorities agreed to build an information sharing mechanism based on the principles of “connectivity, collaborative oversight, joint risk management and ease of operation”. The memorandum clearly spelled out the requirement for joint supervision and further deepening and broadening of co-operation between the two authorities.
The memorandum stated that SAT and SAFE will jointly launch a mechanism for the sharing of information on a day-to-day basis. The two authorities will have mutual access to data relating to tax collection and foreign exchange management. Through mutual data access, the two authorities can jointly monitor, assess and issue early warning in relation to export VAT rebate management, cross-border tax sources management, and foreign exchange receipts and payments management. It is hoped that this will help identify, investigate and punish the law-breaking acts in a timely and precise manner. As well, the two authorities will be able to make use of enterprise categorisation information and carry out the corresponding joint incentives and joint punishment measures. In short, there will be “information sharing, collaborative oversight and mutual recognition of outcomes” between SAT and SAFE.
The joint efforts pledged by the two authorities in sharing more information and carrying out collaborative supervision will be instrumental in improving tax collection management and strengthening inter-department co-operation. Such efforts will also go a long way in forestalling and combatting law-breaking acts such as fraud relating to export VAT rebate and illegal transfer of foreign exchange. The co-operation between SAT and SAFE is set to strengthen in the years ahead. This will help further improve cross-border tax sources management and funds oversight, strengthen joint management of risk, as well as play a bigger role in building a social credit system and contribute to China’s sustained, healthy economic growth.