Before the reform and opening, China exercised a
single taxation system. Because taxation had no connection
with the economic activities of enterprises, this system
lacked vitality. In 1981, the Chinese government began to
collect income tax from Sino-foreign joint ventures and
solely foreign-funded enterprises, taking the first step in
taxation system reform. From 1983 to 1984, the reform
consisting of the replacement of profits by taxes was
carried out in domestic enterprises, and a foreign-related
taxation system was set up. As a result, instead of a single
tax category, a compound taxation system in which turnover
and income taxes were the mainstay and other tax categories
were in coordination with it was initially in place and
promoted the control of finances and the economy. In 1994,
the reform of the taxation system was deepened, and a
complete structural adjustment of the taxation system was
made by taking the market economy as the norm. In 1996,
China lowered the rate of Customs duties and export
drawback, and exercised import supervision.
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