Rethinking Revenue: China Looks To Ease Fiscal Strain With Targeted Tax Reforms

Key Takeaways

• Beijing is exploring tax reforms as it grapples with a growing budget deficit and shrinking local government finances.

• Recent adjustments include expanding the scope of existing tax sources by removing exemptions and stepping up compliance and enforcement.

• Stricter tax enforcement and rising compliance burdens could dampen business sentiment and consumer confidence, undermining efforts to boost consumption.