From May 30 to June 8, 2024, a six-member delegation from the Budgetary Affairs Commission (BAC) of the Standing Committee of the National People’s Congress visited Italy, Germany and the United Kingdom. The topic of the fact-finding trip was the modernization of financial administration.
The Tax Collection and Administration Law of the People’s Republic of China forms the basis for financial administration and tax administration procedures in China. The revision of this law is currently one of the most important tasks of the Standing Committee of the National People’s Congress. The Chinese State Tax Administration (SAT) and the Chinese Ministry of Finance are currently working on a draft to amend the law. The Budget Work Commission supports this work with scientific studies and analyses for the planned legal reform. The main focus is on modernizing tax administration and improving and standardizing tax collection procedures. Achieving these goals is also in Germany’s interest so that German companies that are economically active in China can find transparent, predictable and equal tax conditions throughout the country.
Against this background, a delegation from the Budget Work Commission visited Italy, Germany and the United Kingdom from May 30, 2024 to June 8, 2024. The delegation included six experts and managers from the Budget Work Commission, including the Head of the Legal Department, Mr. WANG Wenyue, as head of the delegation. The aim of the visit was to learn about the principles, concepts and experiences of the three countries in the field of tax systems, tax administration and tax collection procedures and to use this international experience to revise and improve China’s Tax Collection and Administration Law.
In order to give the Chinese delegation a differentiated picture, the Sino-German Legal Cooperation Program of the Deutsche Gesellschaft fuer Internationale Zusammenarbeit (GIZ) GmbH organized working meetings with experts from the legislature, from various administrative levels of the executive branch, and from science and research.
At its first stop in Milan, the delegation was received at the university there by Prof. Guiseppe Marino, who presented the Italian tax system and the extensive, in some cases still unfinished, projects to reform this system. An important goal of the reforms is to change the tax mentality of the population and to improve tax discipline. This approach has proven to be very successful.
In Rome, the delegation first visited the High Command of the Italian financial police (Guardia di Finanza), a specialized, military-organized police unit that reports to the Italian Ministry of Economic Affairs and Finance. General Vito Giordano and other officers of the High Command gave the delegation an impressive insight into the work of this unique unit, which can look back on a 250-year tradition and is responsible not only for the prosecution of tax crimes, but also for combatting all types of economic crime and for maritime border security.
The delegation was then received at the Italian Chamber of Deputies, the larger of the two parliamentary chambers, by senior staff from the Budget, Finance and Planning Committee. One of the committee’s extensive and ambitious tasks is to work on a draft law that will codify and summarize Italian tax law in a uniform tax code.
In Hamburg, Norbert Feige, legal advisor from the Sino-Chinese Legal Cooperation Program, presented tax law and tax procedures in Germany. The focus was not only on the legal basis of tax law and the importance of the most important types of tax, but also on the structure of the German tax administration and important individual questions of tax assessment. The day was rounded off with a visit to the German Customs Museum, which provides visitors with information about the history and present of the German customs administration.
The Customs Museum also served as an introduction to the next item on the agenda, a visit to the Hamburg Main Customs Office. In a lecture followed by a discussion, Ms Kristina Severon explained the structure, tasks and powers of the German customs authorities. One of the most important tasks of the Hamburg customs authorities is to control the import and export of goods via the Port of Hamburg, the largest German seaport and the third largest port in Europe. Among other things, there is a container inspection facility available there, which can be used to check trucks and freight containers using X-ray technology without opening the cargo hold. The largest find of illegal goods to date was the seizure of 35 tons of cocaine in 2023.
At the Hamburg-Hansa tax office, the delegation was received by Mr. Ernst Stoll from the Hamburg tax authority, Ms. Daniela Henning, the head of the Hamburg-Hansa tax office, and the head of department, Mr. Maik Böttcher. Mr. Böttcher presented the structure and activities of the authority, whose responsibility extends to a large part of Hamburg’s inner city, including the St. Pauli entertainment district.
At the second and last stop in Germany, the Berlin branch of the Federal Central Tax Office initially dealt with the fulfillment of central tasks within the German tax administration. The delegation was received by the responsible head of department, Mr. Junghans. The most important instrument for the effective exchange and processing of tax-relevant data is probably the tax identification number, which is assigned individually to each resident by the Federal Central Tax Office and accompanies the taxpayer for life. The introduction of a business identification number for companies is planned for the end of 2024.
The last appointment in Germany was a visit to the Federal Finance Academy in the Federal Ministry of Finance. The focus of the exchange with the President of the Academy, Dr. Robert Heller, was the training and further education of senior officials of the German tax administration.
The BAC delegation then travelled on to the United Kingdom. In Edinburgh, a meeting with the Committee on Finance and Public Administration was on the agenda in the Scottish Parliament. The autonomy rights to which Scotland is entitled also have an impact on tax law. For example, the income tax rate in Scotland differs from the rate applicable in the rest of the United Kingdom.
At the University of Oxford, Professor John Vella presented British tax law and the most important results of his legal research on tax law issues, in particular on preventing the shifting of profits abroad and preventing tax evasion.
The following day began for the delegation with a visit to the British Ministry of Economic Affairs and Finance in London. There, the focus was on current reform projects in British tax law. The focus was on efforts to digitize the collection of income tax. In particular, the taxation of companies and self-employed persons should no longer be based solely on annual tax returns, but with a quarterly adjustment of the tax to the economic development of the taxpayers.
The program concluded with a visit to the London office of the Great Britain China Centre, which has been active in the interests of relations between the United Kingdom and the People’s Republic of China for almost 50 years.
We would like to thank all the people and organizations involved for their hospitality and for the discussions, which were characterized by great objectivity and expertise.