Principles and Practices to Enhance Compliance and Enforcement of the Personal Income Tax

In July, 2011, the Budgetary Affairs Commission of the Standing Committee of China’s National People’s Congress convened an international symposium on reform of China’s Personal Income Tax (PIT) system. Currently about 30 years old, the Chinese PIT system very roughly resembles the U.S. PIT system at a similar age (prior to changes effected during World War II). This symposium paper describes general principles and specific practices to improve compliance and enforcement of the PIT, based on the U.S. experience with that tax. Support for the symposium was also provided by Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ), an enterprise of the German government that supports international cooperation for sustainable development