(Yicai Global) Nov. 23 -- China's Ministry of Finance has answered public concerns about whether or not it will levy estate tax in an official letter it posted online. The nation has not passed an inheritance ta law, but will conduct further studies and track trends in worldwide policies, the ministry said.
Estate tax, also known as death tax, is intended to keep the gap between rich and poor in check in a country or region by levying tax on property, cash and other assets belonging to deceased people. More than 100 countries have this kind of policy in place, with such nations making up 91 percent of the Organisation for Economic Co-operation and Development.
The ministry began studying estate tax with the State Administration of Taxation and other departments in the 1990s, it said. They collected and analyzed common estate tax practices in some countries and regions and continued to monitor changes in their tax systems.
Through studies over the past three decades, the ministry has determined that estate tax has three main pain points: complexity in determining tax coverage, complicated taxation procedures and demanding infrastructure requirements. Introducing estate tax requires the fulfillment of other conditions, such as effective coordination between government departments, making arrangements for tax preservation and enforcing against uncooperative taxpayers.
Judging by global trends in inheritance and gift tax in recent years, taxes help manage the gap between different income classes, but at the same time can affect the national economy, especially in terms of cross-border capital movements, the ministry said. These taxes have become an imported factor affecting the attractiveness of different nations to foreign investors. During recent years, there has been a growing tendency toward abolishing or phasing down these taxes.