Tax revenue data shows: This year, our country's economic development has started off well.

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Source: Beijing Business Daily

On April 1, the State Taxation Administration held a press conference. At the meeting, it was noted that tax revenue data since the beginning of this year shows that China’s economic development has gotten off to a good start and is operating steadily, with an increasingly strong pulse toward “new” development. Wang Daoshu, vice minister of the State Taxation Administration, said at the meeting that the next step for tax authorities is to build on their responsibilities and, in accordance with law and regulations, step up efforts to correct and crack down on “invoice-based” economic activity.

Six major highlights in economic development this year

Wang Daoshu said at the meeting that in the first quarter, tax authorities nationwide collected more than RMB 8.4 trillion in tax and fee revenues. Based on invoice data, since the beginning of this year, China’s economic development has shown a pattern of a good start, solid foundations, and improvements in quality. Six highlights are especially prominent: steady growth in manufacturing development in both quantity and quality, with the “keystone” role further becoming more evident; steady development of new-momentum industries with continuously enhanced momentum for technological innovation; ongoing optimization of the energy mix and accelerating green transformation; release of vitality in service consumption, with the holiday economy showing a clear pull effect; faster growth in corporate procurement of equipment, boosting equipment investment vitality; steady growth in interprovincial trade, with the ongoing push to build a unified national market.

In manufacturing, Wang Daoshu said that from January 1 to March 25 (hereinafter referred to as the “same period”), manufacturing sales revenue grew 5.4% year over year, accounting for 29.2% of nationwide enterprise sales revenue. In particular, sales revenue in equipment manufacturing grew 6.3%, accounting for 46.5% of manufacturing sales revenue, up 0.4 percentage points from the same period last year. Sales revenue in high-tech industries grew 14.6%; driven by demand such as artificial intelligence and computing power data centers, integrated circuit design and integrated circuit manufacturing sales revenue increased by 48.9% and 40.7%, respectively.

During the same period, eco-environmental protection-related industries accelerated development. Sales revenue in the ecological protection and environmental governance industry grew 9.6% year over year. Clean energy power generation sales revenue grew relatively quickly; its share of power generation and sales revenue has already reached 36.3%, up 4.5 percentage points from the same period last year. Among them, solar power generation and wind power generation sales revenue grew clearly faster than the average growth rate of power generation and sales revenue.

Service consumption maintained relatively rapid growth. Sales revenue in guesthouse services and resident services industries increased year over year by 15.3% and 7.3%, respectively. The unusually long Spring Festival holiday boosted the culture and tourism market, making the cultural tourism and leisure entertainment markets active.

According to Wang Daoshu, during the same period, corporate procurement of machinery and equipment reflecting enterprise equipment upgrades increased 8.4% year over year, continuing the relatively fast growth trend. During the same period, the value of interprovincial trade sales nationwide grew 4.3% year over year, accounting for 41% of the nation’s total sales; in more than 80% of provinces, the growth rate of interprovincial trade sales was positive. Interprovincial sales revenue in the transportation and logistics industry grew 6%, effectively supporting the deepening push of the national unified market.

It is worth noting that, under the overall favorable economic trend, issues of “invoice-based” economic activity existing in some regions may interfere with the authenticity of tax revenue data and disrupt the order of economic taxation, running counter to the requirements of high-quality development. Based on the latest published data, the central authorities have increased efforts to crack down on “invoice-based” economic activity, and initial results are becoming apparent.

The tax authorities will step up efforts to rectify “invoice-based” economic activity

“Invoice-based” economic activity is a relatively prominent form of illegal investment attraction and “involution-style” competition in some regions today. A typical situation is that some localities entice various platforms or “shell companies” that only engage in invoice-related business to register and settle locally by illegally implementing fiscal rebates linked to taxes, and certain enterprises, for purposes such as boosting performance and obtaining financing, artificially increase sales revenue by “circular invoicing” and “mutual invoicing” among related companies, effectively “injecting” local GDP, creating the illusion of “digital prosperity.”

Wang Daoshu said that “invoice-based” economic activity violates the Tax Collection and Administration Law, the Tax Entity Law, and the Measures for Invoice Administration. It not only undermines the order of economic taxation and causes actual loss of national financial capacity, but also damages the environment for fair competition, fragments the national unified market, and may also trigger other risks due to enterprises embellishing performance and making illegal loans. It seriously deviates from the requirements of the Party Central Committee on establishing and practicing the correct view of political achievements, severely affecting high-quality development.

In recent years, tax authorities have continuously carried out special governance to address tax-related issues stemming from illegal investment attraction. They resolutely resist conduct that disrupts market order at the cost of damaging tax fairness. At the national tax work meeting held earlier this year, it was required that tax authorities at all levels strictly implement the established measures for special governance regarding tax-related issues in illegal investment attraction, and deeply rectify “invoice-based” economic activity.

Wang Daoshu said that based on invoice data, during the same period, six categories of industries in which illegal investment attraction is relatively concentrated—namely, the comprehensive utilization of discarded resources, the recovery of recyclable materials, wholesale of mineral products and building materials and chemical products, business organization and management services, information technology consulting services, and road freight services—saw their invoicing amounts decline by 4.7% year over year, with the decline deepening by 3.4 percentage points compared with the full-year of last year. Among them, the remediation effects were especially evident in the central regions, with invoicing amounts in these six categories falling 6.2% year over year.

Rectifying “circular invoicing” and “mutual invoicing” has also achieved initial results. During the same period, invoicing amounts in the wholesale industry, where such enterprises are relatively concentrated, fell by 2.6% year over year. Among them, invoicing amounts in the wholesale of coal and its products and in the wholesale of metals and metal ores fell 8.7% and 5.2% year over year, respectively.

Wang Daoshu said that next, tax authorities will, based on their own responsibilities, intensify efforts to rectify “invoice-based” economic activity in accordance with law and regulations. By focusing on key areas of remediation such as clustered registrations, key industries, and related companies, they will improve risk monitoring indicators, strengthen routine scanning and analysis, and, based on verification findings, quickly iterate and upgrade to continuously improve screening accuracy.

At the same time, they will conduct targeted key checks on high-risk regions, industries, and enterprises indicated by risk scanning, continuously clear existing volume and curb incremental volume, and promote the ongoing decline in both the number of companies engaging in illegal invoicing nationwide and the total invoicing amounts. For illegal acts such as issuing false invoices, they will investigate and punish strictly—absolutely without hesitation. For “shell companies” and invoicing platforms that are lured through illegal incentive subsidies or tax rebates, as well as for illegal conduct such as “turning invoices without real business” and “circular invoicing,” they will take targeted handling measures.

“To remove the soil in which ‘invoice-based’ economic activity breeds, relevant parties and all sectors of society need to work together. For regions and operating entities where the problems of ‘invoice-based’ economic activity are relatively prominent that we identify, we will promptly forward relevant information to departments such as the NDRC, the Ministry of Finance, statistics, market regulation, and financial institutions. We will improve and enhance the institutional mechanisms for collaborative rectification of ‘invoice-based’ economic activity, pool the force of cross-departmental coordinated supervision, implement joint punishment, enhance governance effectiveness, and firmly establish and deeply practice the correct view of political achievements, thereby advancing high-quality development.” Wang Daoshu said.

Compiled report by Beijing Business Daily

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