(Source: The Paper 2024-09-24)

Li Ming, Dean of the w88 casino of Government at the w88 casino, delivered a keynote speech at the "The Paper Afternoon Tea/Between Beijing and Shanghai" seminar: Shanghai must reduce business costs and firmly develop new business forms of economy. He elaborated on the industrial distribution and types of the new economy, the new tax system issues brought about by the new business formats, and the orientation and basic work of developing the "three new economies". The following is the essence of the speech:

Li Ming, Dean of the w88 casino of Government, w88 casino

New business economic forms are diverse and distributed in the three major industries

The 2020 "Opinions on Supporting the Healthy Development of New Business Forms and New Models and Activating the Consumer Market to Drive Expansion of Employment" (hereinafter referred to as the "Opinions") proposed 15 new business forms and new models, including online education, Internet medical care, online office, digital governance, virtual industrial parks, new individual economies (including some e-commerce, online live broadcasts, short video platforms, etc.).

However, the development of practice may gradually expand the scope of new business formats. For example, the emerging high-tech gig economy, high-end medical care, etc. Practitioners in the high-tech gig economy do not have a fixed employment unit. They rely on projects and receive wages or labor income after working. Their employment is relatively flexible. High-end medical care is based in special supervision areas (such as Boao Lecheng International Medical Tourism Pilot Zone), enjoys special preferential policies, and establishes high-end health care, medical, and tourism facilities within its area. It is difficult to enumerate all similar new business formats and models, but it is certain that their types and scales will gradually expand.

The National Bureau of Statistics defined new business formats in 2022 as: "New links, new chains, and new activity forms that are derived from existing industries and fields by relying on technological innovation and application in response to diversified, diverse, and personalized product or service needs." It also pointed out that new business formats have three characteristics: First, business activities that rely on the Internet, such as e-commerce. Second, innovation in business processes, service models, and product forms. Such as the aforementioned high-knowledge gig economy and high-end medical care. Third, provide more flexible and faster personalized services.

Based on this definition, the National Bureau of Statistics has been conducting relevant statistics on new business forms and new models since 2018. The "three new" economic value added accounting in 2023 shows that the "three new" economy is distributed in the primary, secondary and tertiary industries, so the new business format is not only dynamic, but also a concept that covers a wide range of industries and extends to various industries.

The new business economy can be mainly divided into e-commerce and digital services

By definition, there are many new economic types. For the purpose of research, we will temporarily classify the new business economy into two categories: e-commerce and digital services. E-commerce mainly refers to operations relying on the Internet; digital services include online advertising, search engines, online games, social media (short videos), platform intermediaries, etc.

When discussing these two new types of economies, it is necessary to clarify the business models, business sources of income, and regional sources of income of the two types of economies. The main model of e-commerce is online retail, and the main source of income is the sale of goods and services, which are mainly supplied by consumers in the place of consumption. Digital service revenue sources vary by type. The regional sources of revenue are mainly the locations of e-commerce platform consumers and social media viewers.

The new business economy brings three typical tax system issues

The development of the new business economy has three main issues that have an impact on the tax system.

Problem 1, tax evasion and avoidance. Existing data analysis shows that for every percentage point increase in a company's online sales, the probability of its actual tax burden being included in a higher tax bracket is reduced by 3.6%, and the probability of entering a high-end tax bracket is significantly reduced.

Question 2, tax transfer. There are differences in tax collection between offline transactions and e-commerce platform transactions. Taxes from offline transactions flow to the location of the transaction, remote transactions plus local collection and administration, and taxes from new business transactions mostly flow to the platform or the location of the headquarters company. Not only that, because some business modules of the platform or the headquarters company enjoy tax preferences (such as being recognized as high-tech enterprises), this transfer is also asymmetrical, that is, the tax losses in the place of outflow are much greater than the tax gains in the place of inflow.

Question three, cross-border transfer. The development of service w88 may also lead to tax transfer issues.

Specifically, tax transfer in e-commerce can be divided into three categories: turnover tax, corporate income tax and personal income tax. Value-added tax is the core of turnover tax and mainly comes from corporate sales revenue. According to relevant estimates, when goods are sold in other places, Zhejiang, Beijing, Shanghai, Guangdong, Fujian, Jiangsu and other places benefit from the net inflow of tax revenue due to large online sales. Other provinces experienced net tax outflows.

Changes in the spatial distribution of corporate profits have also led to the transfer of corporate income taxes. This means that corporate taxation is no longer concentrated where profits are generated.

The transfer of personal income tax is relatively indirect. Digital economy center cities have a large number of practitioners and relatively high incomes. Therefore, personal income taxes in these cities are also higher, which promotes local economic growth. The business income of e-commerce practitioners is also included in the scope of personal income tax. In addition, changes in personal property can also result in a shift in taxes.

It’s a similar story with digital services. The recently popular game "Black Myth: Wukong" cost at least 300 to 400 million. After being put on the market, the game recovered its production cost within one day. The game's development company is located in Shenzhen, the city that benefits the most from it. Digital services also include search engines, online advertising, and spatial transfers of services will also result in tax transfers. Compared with Shenzhen, Shanghai's development in online advertising is acceptable, but the gaming industry seems not as good as Shenzhen's.

The impact of new business formats on the tax system has brought about three major problems. First, it weakens the overall fiscal security capability and produces asymmetric tax transfers, which affects national and local finances. Second, it affects the fiscal relationship between the central and local governments. Third, it indirectly affects the equalization of basic public services. From the perspective of specific tax types, it affects value-added tax, corporate income tax, personal income tax, etc.

The orientation and basic work of developing the “Three New Economies”

To promote the development of "three new economies", we should first adhere to the three major principles:First, the "Opinions on Further Deepening the Reform of Tax Collection and Administration" issued by the General Office of the CPC Central Committee and the General Office of the State Council in 2021 proposed that "adhere to the principle of inclusiveness and prudence and actively support the healthy development of new industries, new business formats, and new models." The principle of tolerance and prudence must be implemented, otherwise it will be difficult to quickly find new breakthroughs in a short period of time. Second, adhere to the revenue division system with shared tax as the main body, and improve the existing tax system rather than create new taxes. Third, we must adhere to the consistency between taxation and tax sources and make taxation the price of public services.

Three basic tasks should be implemented to develop the “three new economies”:First, fully implement the provisions that operators who carry out business activities through online platforms can use online business premises to register individual industrial and commercial households. Second, implement relevant reporting regulations. The "E-Commerce Law" clearly stipulates that e-commerce platform operators shall submit the identity information of operators on the platform to the market supervision and management department in accordance with regulations; e-commerce platform operators shall submit the identity information of operators on the platform and tax-related information to the tax department in accordance with the provisions of tax collection and management laws and administrative regulations. Third, reform the reporting method. For example, personal tax declaration can clarify the regional structure of income sources.

Specifically in terms of e-commerce taxation, the collection of value-added tax can adhere to the principle of the place of consumption. In terms of corporate income tax, one approach is to adhere to the principle of source distribution and split the tax before distributing it. How to do this specifically? We can learn from the practice of cross-provincial operating organizations, which allocate taxes according to a certain proportion based on their operating income, employee compensation, and total assets. But for e-commerce, employee compensation and total assets are insignificant parts, and sales revenue is the core element. In addition, whether this plan is only applicable to new business forms of economy or all economic forms also needs to be considered. For budget management, a simple method is local management, local warehousing, and horizontal transfer. There are now relatively mature methods that can be used for reference.

For digital service platforms, we have a clear list of companies. The source of income can be confirmed based on the list, and on this basis, taxes can be allocated according to corresponding principles. After the digital platform clarifies the allocation method, taxation will be relatively easy to carry out.

In addition, the tax system adapted to the new business format actually also involves the issue of transfer payments. For example, the balancing transfer payment algorithm involves the measurement of standard fiscal revenue. In the presence of tax transfers, standard fiscal revenue will also be skewed, resulting in skewed transfer payments. Therefore, the relevant transfer payment system must also be adjusted accordingly.

Shanghai should pay attention to two major points when dealing with the new business economy

Shanghai can make efforts in many aspects to lead the economic development of new formats.

First, unswervingly develop new business formats.Shanghai is generally a beneficiary of new business formats. The establishment of a tax system that is compatible with new business formats may have a certain impact on Shanghai's economic stock, but it must focus on incremental growth and unswervingly develop new business formats.

Second, reduce business costs and attract talents and elements.Returning to history, some companies go to Shenzhen and Hangzhou for development instead of choosing Shanghai. Part of the reason may be this.

There are core urban areas in Beijing that regard the cultural industry as the focus of development and attach great importance to the digital cultural industry. Its products are digital services and are operated nationwide and globally. These urban areas will provide a lot of convenience for such enterprises, and the enterprises do not need to occupy much land and houses, but when the enterprises develop well, they can share the dividends. There is something worth learning here.

Original link: https://m.thepaper.cn/newsDetail_forward_28788455