Tax evasion from Danone executives thought provoking

According to a Xinhuanet report dated July 23: the NPC Financial and Economic Committee proposed to increase the individual income tax threshold and lower the interest tax. A number of Internet media, including “finance.sina.com.cn", "China.com", also reported the news which stirred up a widespread concern and discussion among main force of taxpayers.

However on July 24, the next day of this news published, "Shanghai Securities News" reported that Danone Asia executives Qin Peng is suspected of being involved in a tax evasion case. At present, Qin Peng tax evasion case has been submitted to Shanghai Financial and Taxation Bureau--the 5th branch of the Financial Supervision and Taxation Inspection Bureau for formal investigation.

On this case, Internet users have different viewpoints. Someone said: it is a common practice for foreign invested enterprises such as Danone to pay the salaries outside China so as to reasonably avoid tax.

Tax law experts pointed out that in multinational companies, most wages of foreign executives are paid by their parent companies overseas. In accordance with China's tax law, the part of the wages paid outside China requires self-declaration. Since 2007, China's tax law states that individual taxpayers have the obligation to declare his salary and pay the tax. However, the reality is if these executives do not truthfully declare to the tax department, neither the domestic invested companies nor the tax bureau is capable of assisting recovery.

Qin Peng tax evasion case was disclosed during the investigation process of his violation to the "Company Law"--"Non-competition of Competitive Business Behavior" by Shenyang First People's Court. In June, when Shenyang Intermediate People's Court made the "civil judgment", Qin Peng acknowledged that as a director and chairman of the domestic firm, his salaries were paid by Danone Companies from outside China.

Information shows that Qin Peng has French nationality. He has been working in China for 12 years. As director, the chairman and other senior management roles in 25 Danone invested companies in China, Qin Peng's estimated payment of remuneration was more than 60 million RMB Yuan . If it is true that the company which informer claimed has not paid Individual Income Tax for Qin Peng, and the foreign-invested enterprises who accepted his services have not fulfilling their obligations of withholding his individual income tax. Then in these 12 years, Qin Peng has been enjoying the treatment to Chinese citizen but never paid individual income tax. Furthermore, tax law experts pointed out that if Qin Peng tax evasion case is confirmed, a huge amount of money would be involved.

On one hand, state organs called for tax reduction for working class; on the other hand, foreign enterprises executives are violating tax law. This is a thought-provoking issue.

In the writer's view, to the working class who obey the tax law, foreign enterprises executives tax evation is a provocation. Moreover, it is a violation of tax law's "fair" and "efficiency" principle. Qin Peng's tax evasion has made tax laws a tool of "robbing the poor to benefit the rich". Since most Danone China executives' salaries are paid by the foreign parent companies, Qin Peng tax evasion case is probably the tip of the iceberg in many Danone's executives. According to Danone Asia's internal staffs, many foreign officials such as You Jianhua, Gu Peiji all serve in China, but receive payments from overseas. These officials are also suspects of tax evasion.

China's tax authorities have always been firm when dealing with tax evasion. It is commendable for Shanghai's taxation bureau who quick filed the reported letter. They paid great attention on the case and safeguarded the legitimate rights and interests of other taxpayers. As a social celebrity and a rich man, Qin Peng's acts of tax evasion has greatly damaged the social equity, it resulted in a deviation of the morale. Shanghai Tax Bureau filed an investigation for the case in no time protected the rights of Chinese citizens who obey the tax law and show their respects.