The Evolution of the Tax System in the Republic of China

Social Sciences in China (Chinese Edition)

No.11, 2019


The Evolution of the Tax System in the Republic of China



Ke Weiming


Under the Republic of China, with the implementation of a series of fiscal and taxation reforms by the Beiyang Government and the Nationalist Government in Nanjing, the traditional tax system moved towards a modern system. The system presented complex features in terms of its management and collection systems, tax structure, collection-payment relationship, and foreign taxation. The transformation of the traditional centralized fiscal system into a tax-sharing one nominally involved decentralization, but was actually a form of centralization. The evolution from the tax farming-out system and tax collection by agents to an official collection system was the trend of the times, but it did not happen overnight. Industrial and commercial taxes had replaced the land tax as the main body of the tax system, but direct taxes had yet to undermine the position of indirect taxes. Industrial and commercial groups actively participated in tax administration, forming a new type of political-business collection-payment relationship; but the implementation of foreign-related taxation, subject as it was to unequal treaties and extraterritoriality, encountered many difficulties. In the course the transformation of the Republican tax system, the relationships between the central and local governments, the government and the business community, and Chinese businessmen and foreign merchants were intertwined, reflecting taxation’s links with politics, the economy, and society. The system was strongly influenced by the inertia of traditional centralization and the development of the capitalist economy, and also bore the stamp of semi-colonialism.