2023 China tax policy review and 2024 outlook

Navigating twists and achieving goals with steady progress​

March 2024

The China Tax Policy Review and Outlook is a series of annual publications designed by PwC’s China National Tax Policy Services to review key tax policy developments in China and discuss the trends as well as implications on Chinese enterprises from a forward-looking perspective. This 2023 China Tax Policy Review and 2024 Outlook is the 8th issue in the series.

2023 is a key year for global economy to gradually step out of downturn and strive for recovery. According to the Economic Outlook issued by the Organisation for Economic Cooperation and Development (OECD), the world economy achieved a growth by 2.9% in 2023, maintaining a moderate growth momentum. As an important engine for global economic growth, China witnessed its GDP of over RMB 126 trillion in 2023, an increase of 5.2%, demonstrating its tremendous economic resilience.

This hard-earned growth was attributed to China’s persistent efforts in deepening economic restructuring and transformation, along with the implementation of proactive fiscal policies in an increasingly effective way. On the one hand, great progress has been made in high-end, intelligent and green development of manufacturing. Besides, the added value of service sector accounted for 54.6% of GDP, which promoted the overall economy growth. On the other hand, proactive fiscal policies have been more targeted and sustainable, with a focus on effectively ramping up support for the real economy, fostering technological innovation, expanding consumption and attracting foreign investment.

This issue of 2023 China Tax Policy Review and 2024 Outlook includes the following contents:

• In terms of supporting economic development, a number of tax incentives to support financing and targeting small and micro enterprises and individual entrepreneurs were extended;
• In terms of encouraging scientific and technological innovation, policies such as super deduction of R&D expenses, income tax incentives for venture capital enterprises, as well as VAT refund and extra-credits have been comprehensively upgraded;
• In terms of tax collection and administration, the reform of electronic invoices has been fully rolled out, and the Golden Tax IV has been continuously pushed forward, unveiling the era of "e-Tax Administration";
• In terms of international trade and taxation, the BEPS two-pillar solutions, the EU carbon border adjustment mechanism (CBAM) and foreign subsidy regulations have brought new challenges;
• 2024 Outlook.

China's tax policy provides strong support for economic recovery and development in 2023. As stated in the Government Work Report presented during the Two Sessions of the Central Economic Work Conference, China will maintain its proactive fiscal policy in 2024, and make appropriate improvements to enhance the quality and efficiency. PwC believes that in 2024 and beyond, taxation will keep playing a key role supporting the high-quality and sustainable economic growth in China.