China is aiming to digitize its tax-invoicing system as part of the government’s efforts to raise more revenue and limit instances of tax evasion committed by companies, including those in the seafood sector.
The implementation of China’s Golden Tax System – effectively an IT system for China's tax collectors – aims to, among other goals, digitize legal invoices issued by merchants so that these can be shared easily across state agencies.
The Chinese State Administration of Taxation has set the end of 2025 as the time by which all businesses will be required to use the electronic system of invoicing.
According to a Beijing-based seafood distributor, many seafood companies in China have misrepresented their finances on their tax invoices and have often relied on agents to provide invoicing services when required to declare income. This scenario would end when the invoicing system becomes digitized and traceable on a national level, he predicted.
This move follows several made by Chinese authorities over the past two years, who have cracked down on fraud. One such move was made in response to companies overinflating the value of their exports and imports in a bid to evade taxes and get cash out of the country.
Before that, China went after seafood traders who effectively smuggled their products over the border from Hong Kong and Vietnam, which resulted in a loss to national coffers in import tax revenue.
A shortage of revenue overall appears to be prompting the latest tax-collection efforts by the government. Sales of real estate fell 13 percent in value in 2023, pressuring the Chinese government’s traditional revenue base that relies on housing construction and sales.
The government’s tax revenue as a percentage of GDP, totaling 7.7 percent in 2023, is low by Western standards – the figure in the U.S. is 12.6 percent and 23 percent in the U.K. – and has continued to fall, according to World Bank data.
