Tax is the most important source of fiscal revenue of China. It is also an important economic lever utilized by the State to strengthen macro-economic regulation, which produces important impacts on China' s economic and social development. After the tax system reform in 1994 and the fine-tuning of it in subsequent years, China has preliminarily built up a tax system adaptable to the socialist market economy, which has been playing an important role in assuring China's fiscal revenue, broadening the opening to the outside world and promoting the sustained, fast and healthy development of China's national economy.

Under the current tax system in China, there are 18 types of taxes, which, according to their nature and function, can be divided into the following 5 categories:

a) Category of turnover taxes. It includes 3 kinds of taxes, namely, Value - Added Tax, Consumption Tax and Tariff. The levy of these taxes are normally based on the volume of turnover or sales of the taxpayers in the manufacturing, circulation or service sectors.

b) Category of income taxes. It includes Enterprise Income Tax (applicable to such domestic enterprises as state-owned enterprises, collectively-owned enterprises, private enterprises, joint operation enterprises and joint equity enterprises，and applicable to Foreign Investment and Foreign Enterprises) and Individual Income Tax. These taxes are levied on the basis of the profits gained by corporation and other economic organizations, or the income earned by individuals for a period.

c) Category of resource taxes. It consists of Resource Tax and Urban and Township Land Use Tax. These taxes are applicable to the exploiters engaged in natural resource exploitation or to the users of urban and township land. These taxes reflect the chargeable use of state-owned natural resources and aim to adjust the different profits derived by taxpayers who have access to different availability of natural resources.

d) Category of property and behavior taxes. It compasses House Property Tax, Vehicle and Vessel Tax, Stamp Tax, Deed Tax, Vehicle Purchase Tax and Vessel Tonnage Dues.

e) Category of taxes for special purposes. These taxes are City Maintenance and Construction Tax, Farmland Occupation Tax,  Land Appreciation Tax. Fixed Asset Investment Orientation Regulation Tax, Tobacco Tax and Environmental Protection Tax. These taxes are levied on specific items for special regulative purposes.