Modern Legal Regulation of Inter-Budget VAT Distribution in the People’s Republic of China
https://doi.org/10.21684/2412-2343-2025-12-2-136-150
Abstract
The work presents a comprehensive study of legal regulation of interbudgetary VAT distribution in the People’s Republic of China in the context of the country’s socio-economic development. Particular attention is paid to the analysis of financial decentralization and the distribution of income from value-added taxation at the municipal district level and the distribution of budget revenues in the provinces of the People’s Republic of China. Decentralized distribution of value added tax has a great impact on innovative development in the context of an imbalance in budget expenditures. The author makes a conclusion that one of the key factors for the success of Chinese reforms is the stimulation of provincial and local authorities to develop the economy by combining the expansion of budgetary powers with the administrative and disciplinary control methods. The harmonization of central functions and the separation of financial and legal powers between different levels of government allows Chinese authorities to focus on the following targets: (1) concentration of financial resources; (2) balanced regional development; (3) motivation of local authorities through decentralization; (4) effectiveness of financial control. The inter-budgetary distribution of VAT in China is one of the significant financial and legal instruments of effective socioeconomic policy. Modern legal regulation of inter-budgetary VAT distribution in the PRC is aimed at supporting industrial policy and expanding production capital based on the gradual transfer of the tax burden from production to consumption while maintaining stable budget revenues from value-added taxation.
Keywords
inter-budgetary distribution of VAT,
budget revenues in the provinces,
legal regulation of value-added taxation,
budget allocation
Supporting agencies: The research was funded by the Russian Science Foundation Grant No. 25-28- 00172, project: “Concept of legal regulation of inter-budgetary VAT distribution in the Russian Federation” https://rscf.ru/project/25-28-00172/.
About the Author
D. Bachurin
University of Tyumen
Russian Federation
Russian Federation
Dmitry Bachurin – Leading Researcher, Laboratory “Functional Foundations of Social Behavior Modeling,” Center for Innovative Design and Applied Research
7a Krasina St., Tyumen, 625003
References
1. Bachurin, D. G. (2019). Directions of reforming the system of legal regulation of value-added taxation. State and Law, 2, 71–79. https://doi.org/10.31857/S013207690003853-0. (In Russian).
2. Chen, С., & Wu, Н. (2008). Fiscal structures and regional economic growth: Evidence from China’s fiscal contract system. Journal of Developing Areas, 41(2), 119–135.
3. Fang, H., Lu, W., & Su, Y. (2020). Distribution of fiscal revenue among sub-provincial governments in China: Theory and evidence. Academy China Journal Electronic Publications, 4, 118–133.
4. Glazyev, S. Y. (2023). Beyond the horizon of the end of history: A monograph. Prospekt. (In Russian).
5. Liu, Y., Martinez-Vazquez, J., & Wu, A. M. (2017). Fiscal decentralization, equalization, and intra-provincial inequality in China. International Taxation and Public Finance, 24, 248–281. https://doi.org/10.1007/s10797-016-9416-1
6. Lu, B. (2014). Building modern interstate financial relations. Journal of Renmin University of China, 28(5), 11–19.
7. Lu, B., Ma, G., & Hu, S. (2021). How to divide the pie: Measuring the main indicators of China’s fiscal decentralization. Institute of Finance and Taxation of Renmin University of China, 42(8), 20–36. https://doi.org/10.3969/j.issn.1002-8102.2021.08.005
8. Oates, W. E. (1999). An Essay on Fiscal Federalism. Journal of Economic Literature, 37(3), 1120–1149.
9. Ong, L. (2006). The political economy of township government debt, township enterprises and rural financial institutions in China. China Quarterly, 186, 377–400.
10. Sacchi, A., & Salotti, S. (2014). The effects of fiscal decentralization on household income inequality: Some empirical evidence. Spatial Economic Analysis, 9(2), 202– 222. https://doi.org/10.1080/17421772.2013.833343
11. Shen, Ch., Iin I., & Zou, H. (2012). Fiscal decentralization in China: History, impact, challenges and next steps. Annals of Economics and Finance, 13(1), 1–51.
12. Wu, M., Zhu, L., & Shi, G. (2023). Typical facts of tax distribution by governments at the district level in China: calculation and analysis based on unique data. Finance, Trade and Economics, 44(04), 5–20. https://doi.org/10.3969/j.issn.1002-8102.2023.04.001
13. Zhou, L.-A., & Wu, M. (2015). Tax sharing rates among sub-provincial governments in China: Facts and explanation. Journal of Financial Research, 424(10), 64–80.
Review
For citations:
Bachurin D. Modern Legal Regulation of Inter-Budget VAT Distribution in the People’s Republic of China. BRICS Law Journal. 2025;12(2):136-150. https://doi.org/10.21684/2412-2343-2025-12-2-136-150
Views:
12
Email this article 