2020 China Tax Review

2020 witnessed a continuing economic slowdown around the globe, along with the unexpected outbreak of COVID-19. In June, the World Bank forecasted that the global economy would shrink by 5.2%, while the Organization for Economic Co-operation and Development (OECD) projected a decline of 4.2% in the 2020 economy.

Statistics released by the PRC Ministry of Finance show a year-on-year decrease in national tax revenue of 11.3% for the first half of 2020, and a year-on-year decrease of 3.7% from January to November 2020. These figures may indicate a gradual recovery of China's economy from the large drop at the start of the year.

During the year, there have been a number of tax developments in China, including supportive tax measures undertaken by the government to fight against COVID-19. The key developments, as highlighted in more detail below, have been:

• the completion of the first individual income tax ("IIT") annual declaration and settlement;
• the promotion of regional coordination development in the PRC;
• the acceleration of tax legislation;
• tax reliefs taken against the COVID-19 pandemic; and
• active participation in the international tax field.

Completion of the first IIT annual declaration and settlement