China is urging wealthy citizens, firms to pay more taxes
According to a Financial Times report, China is asking its wealthy citizens and companies to "double check" their tax liabilities and pay any dues. The move comes as the world's second-largest economy faces a revenue downturn. Tax authorities are now targeting these high-net-worth individuals and companies for "self-inspections" of tax payments. They have also been asked to keep proof of compliance for future scrutiny if no liability is found.
Back-taxes on overseas investment gains included
The tax scrutiny also covers back-taxes on personal overseas investment gains. This heightened focus on tax compliance has reportedly left China's wealthy population feeling apprehensive. The drive is part of a wider effort by the Chinese government to revive its economy and restore investor confidence, which has been rattled amid the ongoing fiscal challenges.
China's central bank plans to reduce borrowing costs
In a bid to stimulate economic growth, the People's Bank of China (PBOC) has outlined strategies to lower borrowing costs and allow banks to increase their lending. Meanwhile, Beijing is also preparing to approve a fiscal package worth trillions of yuan aimed at steering its economy back on track. These measures come as local governments cut back on spending amid the economic downturn and a prolonged property slump.
Local governments reduce spending amid economic challenges
China's local governments have been cutting down on their spending as the economic slowdown and a protracted property slump eat into revenues from taxes and land sales. Many are also wary about new borrowings to fund investment due to diminishing returns. This caution is further fueled by their efforts to align with President Xi Jinping's clampdown on concealed liabilities, adding another layer of complexity to China's current economic landscape.
