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Tax authorities said yesterday they had received 1.6 million declarations from high-income earners by April 2, the deadline for filing personal income tax returns.

The figures, posted on the website of the State Administration of Taxation (SAT), did not include details about the declarations that had been filed, noting only that "more income statements are expected to come through the mail from regions where computer networks are unavailable".

Any declarations postmarked before midnight last Monday are valid. Tax authorities will announce the final number of the declarations filed before Tuesday.

The number received so far represented only about a third of the 6 million to 7 million taxpayers who fall into the category.

However, tax experts said the results were "not bad" given that this was the first year the SAT had asked high-income earners to submit earnings declarations. They also noted that taxation bureaux had given the new rule only limited publicity and that the regulation had been issued only at the end of last year.

The new rule affects people whose income from salary and dividends exceeds 120,000 yuan ($15,400) a year.

However, An Tifu, a finance expert at Renmin University of China, said mainstream workers made up the majority of the people affected by the new rule, despite expectations that the self-declaration policy would mainly target private business owners and the senior managers of State-owned enterprises.

"Supervision of the income of officials and managers is pretty lax. Only a small portion of their income is recorded by the accounting system, and some of it even comes in non-monetary forms," An told China Daily.

An suggested that a network of commerce officials, tax authorities and banks be put together to monitor the income of big earners and to find a way to monetize all of their income to plug any loopholes in the information-gathering process.

Yang Zhiqing, deputy dean of the School of Taxation at the Central University of Finance and Economics, said shortcomings in the accounting systems used by most medium and small-sized enterprises allowed many high-income earners to simply slip through the cracks.

Tax authorities have said high-income earners who fail to file income statements will be subject to keen scrutiny.

Those who do not file a declaration will face fines of between 2,000 and 10,000 yuan ($260 and $1,300). And people who falsely report their incomes can be fined up to 50,000 yuan ($6,400).

Penalties for evading taxes can equal five times the amount of unpaid tax and a jail term.

(China Daily 04/06/2007 page3)