(CBN - Global) May 11 -- A Chinese government representative today issued a stern warning to foreign corporations and individuals about tax evasion in a speech made at the Forum on Tax Administration, a three-day international event held in Beijing until May 13.
The State Administration of Taxation, the highest tax authority in China, will issue a document later this month requiring multinationals and individuals operating and working in the country to disclose their business dealings, so that it can be determined whether it involves any inappropriate tax avoidance measures, the SAT official said.
PwC China partner Mr. Tang Enliang believes this crackdown is in line with the G20's decisions on base erosion and profit shifting, a program that tries to address the negative impact of multinationals' tax avoidance measures on national tax bases. Authorities in the US, UK, Japan and Germany have often expressed dissatisfaction with China for shielding their companies from a clampdown on tax dodging.
China's tax authorities collect information on business activities by all multinationals and expats in China. Technically, there is no obstacle for China to crack down on tax evasion, Mr. Wei Jianguo, a former commerce minister, told CBN. China has made clear that other governments will be given access to this information. SAT has signed agreements with all G20 members except the US, which has been pressing for a deal.
The Organisation for Economic Co-operation and Development estimates that governments lose USD250 billion in tax revenue every year due to base erosion and profit shifting among multinationals. That figure rises to USD500 billion when tax evasion by individuals in factored in. China's involvement in the global campaign against tax avoidance will strengthen its cooperation with other G20 countries.