China should levy taxes on the digital economy to ensure taxation fairness is not compromised in its push for innovation, China's Finance Minister Lou Jiwei said on Saturday.
The digital economy, an emerging economy which includes e-commerce, digital sharing, and services, demands a change in current policy, as a large portion of the sector remains untaxed, Lou said at a meeting between G20 finance ministers and central bank governors in Chengdu.
It is absolutely necessary to levy taxes on the digital sector because many of these companies are in traditional sectors, and have merely expanded onto the Internet and are not an innovation of core technology, but rather represent just a change in business models, Gao Liankui, research program director of China and World Economic Governance at the Department of Economics of Renmin University of China told the Global Times.
China needs to develop new sources of tax revenue because the country's interest payments for public debt have exceeded public expenditure on science and technology, and besides individuals and entities in the digital economy should pay taxes as they also enjoy public resources and services, Gao said.
Taxation in the digital economy can be rolled out on trial basis and tax immunity mechanism can be in place to waive taxes for some new firms or firms whose business revenue is below a certain level.
Meanwhile, Lou said on Saturday that China would move forward in its long-delayed reforms on income tax and property tax.
