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 林子大了什么鸟都有

Thursday
Nov292012

"We Could Make it Harder for the Wealthy to Emigrate"

Below is a translation of this article in the People's Daily Blog, which is currently trending on Sina Weibo with over 13,000 retweets and 3,500 comments.

 

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Recently, reports that the chairwoman of the Beijing-based restaurant group SouthBeauty Zhang Lan renounced her Chinese nationality have been a subject of great interest.

Zhang Lan is not the only wealthy Chinese to have choosen to emigrate in the past few years, and the controversy surrounding the topic has been constant.

Why are people from some European and American countries much less upset about the emigration of the rich compared to the Chinese? One reason is that compared to Chinese rich people, some rich Europeans and Americans face complicated taxes levied when they emigrate.

According to media reports, the US tax code has established that if Americans renounce their citizenship, the government may go back 5 years and require that the person renouncing American citizenship pay fines for overseas assets and unreported tax evasion. If they do not pay taxes according to the law, then they must, in accordance with the regulations of the new proactive reporting case, pay back 8 years of taxes and interest, as well as fines levied in the amount of 25% of the highest-income account in the past 8 years.

Additionally, US laws require that Americans renouncing citizenship must pay an “exit tax” on unrealized capital in excess of $600,000 USD. According to previous media reports, when former Facebook founder Eduardo Saverin emigrated he was billed $365 million in taxes on his share of the stock, which he may postpone paying until he sells his shares of Facebook. But if he chooses to postpone paying the bill, Saverin must pay 3.28% interest every year to the US government.

In contrast, when rich Chinese want to renounce their citizenship, it is much easier. According to Article 10 of the Nationality Law of the People's Republic of China, Chinese citizens who meet any of the following requirements may renounce their citizenship by application: 1) are a close relative of a foreign citizen; 2) have established permanent residence abroad; 3) have another legitimate reason.  Also, according to Article 9, Chinese citizens who voluntarily take other citizenships automatically lose their Chinese citizenship. No body that levies taxes in this country has an “exit tax,” and all taxes levied on Chinese abroad is done by voluntary disclosure of assets. When a person renounces citizenship, there is no strict tracing back.

The optimization of every aspect of the tax system is something ordinary people care about. The establishment of a tax policy that helps the optimization of the system as a whole and the equality of society, raises the incomes of lower-income groups and limits overly high incomes, and realizes the sharing of the fruits of development among all people, is an important aspect of the 18th Party Congress Report. Some tax measures taken by European and American countries in response to the renunciation of citizenship by the wealthy may serve as a good example for us.

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