A Brief Introduction to Shanghai Municipal Bureau of Finance

I. Main functions and duties

(I) To implement State policies, laws, statutes and regulations on finance and taxation; to study and draw up draft statutes, regulations and policies of a local nature on finance and taxation in the light of the actual conditions of this Municipality and see to their implementation.

(II) To study and formulate development strategies and medium-term and long-term plans for finance and taxation in this Municipality, in the light of the State and municipal social and economic development strategies, and see to their implementation; to gradually improve the administrative regime for comprehensive budgets, including government and public budgets, State-owned capital fund budget, social security budget and other budgets; to prepare the drafts of annual financial budgets and final accounts and be entrusted by the Municipal Government to report to the Municipal People's Congress on the budget performance of this Municipality for the preceding year and the draft budget for the current year and to the Standing Committee of the Municipal Peoples' Congress on the draft final account; to manage financial revenues of different types, funds of a fiscal nature and special financial accounts, to prepare comprehensive financial budgets of different types and see to their implementation; to study, formulate and implement relevant policies on the distribution of fiscal revenues; to formulate and apply fiscal and tax policies to adjust the operation of the economy and to balance the comprehensive capacity of the government finance.

(III) To draw up taxation development plans and annual work plans in this Municipality in the light of the economic and tax resources of this Municipality, the allocation of budgeted revenues and the tax collection plans issued by the State Administration of Taxation and see to their implementation; to make projections and analyses on tax information and to keep track of developments in the field of taxation; to strengthen inspections on taxation, conduct public information campaigns on tax laws and improve the environment for tax law enforcement.

(IV) To participate in the formulation of macro-economic policies and industrial policies of this Municipality, as well as in the formulation of policy measures and reform programs on investment in capital construction, labor and wage, prices, economy and trade, special credit guarantee, foreign exchange, science and technology, education, housing and social security; to formulate the financial administrative regime for social insurance funds and social security undertakings and take charge of the administration of municipal-level special financial accounts of social security funds and strengthen the supervision of their use; to use economic leverages, such as finance, taxation and subsidies, and organize the implementation of various measures in active support of the reform, development and stability of this Municipality.

(V) To implement the financial administrative regime of separate taxation for the central government and this Municipality and regularize the financial distribution relationship between the Municipality on the one hand and districts and counties on the other; to organize the implementation of the General Principles of Financial Administration in Enterprises promulgated by the State and the sectoral financial systems and regularize the interest distribution relationship between governments and enterprises; to be responsible for the administration of the issuance of lotteries and the approval of charged items for administrative organs and institutions and administer in a unified manner vouchers and bills of administrative and institutional charges, fines and government foundations.

(VI) To manage and supervise expenditures on economic construction, education, science, culture, agriculture, administration, law, justice and social security borne by the municipal finance; to manage the non-trade foreign exchanges of administrative organs, institutions and public organizations within the financial budget and the international balance of payments within the financial budget; to be responsible for the financial supervision and management of the loans extended to this Municipality by foreign governments and international financial institutions, such as the World Bank, and their projects; to study, formulate and implement government procurement policies and organize the implementation of the Financial Rules for Administrative Units, Financial Rules for Institutions and the financial system for capital construction.

(VII) To administer and guide the accounting practice in this Municipality; to organize the implementation of the Accounting Principles for Enterprises promulgated by the State and the sectoral accounting systems; to organize the examinations, tests and evaluations of the service qualifications of accounting personnel and the professional and technical qualifications of accountants, as well as the training of accounting personnel; to ensure that all accounting personnel perform their duties in accordance with law, investigate and deal with cases of violation of financial discipline by accounting personnel; to organize the implementation of the appointment system of financial accountants, to appoint chief financial supervisors to selected State-funded units in consultation with relevant departments and to administer and guide the appointment qualifications of chief financial supervisors; to guide and supervise the operations of offices of certified public accountants, offices of accountants and associations of certified public accounts.

(VIII) To take charge of the administration of the day-to-day collection of various taxes in this Municipality and to process the tax registration of tax payers of different types; to be responsible for the regular tax inspection and the handling of violations of regulations; to be responsible for the administration of tax vouchers of all types; to guide and supervise the work of tax agencies and associations of certified tax accountants.

(IX) To be responsible for the administration of import and export duties in this Municipality; to be responsible for the administration of tax collection from foreign invested enterprises, foreign enterprises and expatriates; to implement State policies on taxation involving foreign parties and the tax agreements signed between China and other countries.

(X) To be responsible for the modernization of financial and tax administration and the planning and development of the computer information networks in this Municipality.

(XI) To be responsible for the inspection on the administrative law enforcement in finance and taxation departments in this Municipality, the acceptance of applications for administrative reviews and responses to administrative proceedings.

(XII) To be responsible for the management of the funds, finance, capital construction and assets of the tax establishment in this Municipality, as well as for the internal auditing within the establishment; to be responsible for the organization, staffing and personnel administration of the tax establishment in this Municipality; and to be responsible for the inspection and supervision of the discipline in the tax establishment.

(XIII) To be responsible for the ideological and political work, the construction of spiritual civilization and grass-roots construction within the finance and tax establishment in this Municipality, as well as for the management of education and training.

(XIV) To conduct research on financial and tax theories and policies, analyze financial and tax information, keep track of financial and tax-related developments and organize public information campaigns on tax laws.

(XV) To undertake other tasks assigned by the Ministry of Finance, the State Administration of Taxation, the Municipal Party Committee and the Municipal Government.

II. Organizational setup

The internal organs of Shanghai Municipal Bureau of Finance, Shanghai Municipal Administration of State Taxation and Shanghai Municipal Administration of Local Taxation include:

(I) 8 comprehensive functional divisions and offices, responsible for internal personnel, financial and tax legislation, education, clean and honest government construction, information technology development, policy research and administration respectively.

(II) 11 divisions and offices with financial functions, responsible for the implementation of budget management, State treasury management, the formulation and implementation of sectoral (industry) financial policies, accounting management, foreign cooperation and exchanges respectively.

(III) 7 divisions and offices with taxation functions, responsible for work related to tax policies for different types of taxes, the guidance of the collection, inspection, verification and management of taxation, the formulation of plans of tax revenues, the accounting and statistics of taxation and the administration of vouchers and bills respectively.

(IV) 11 directly administered institutions, of which Shanghai School of Economics and Finance and Shanghai University for Finance and Taxation Staff are responsible for the cultivation and training in rotation of finance and tax personnel, Shanghai Research Institute of Financial (Taxation) Science is responsible for forward-looking research on key and difficult issues in the fields of public finance and taxation and the other centers are responsible for the professional management of operations in their respective fields.

(V) 9 branch bureaus of finance and taxation directly under the municipal bureau and 19 district and county taxation bureaus have been established under the current financial and tax administrative system. The directly-administered branch finance and tax bureaus are responsible for the centralized management of the tax collection from municipal-administered industrial, commercial and non-industrial enterprises and institutions, foreign invested enterprises and enterprises of the central government departments in Shanghai, as well as for relevant financial management work. The district and county taxation bureaus are responsible for the management of tax collection from industry, commerce, foreign-invested enterprises, agriculture, local markets, urban and rural individual industrial and commercial entities and municipal-administered collective industrial units within the jurisdiction of their respective areas.

(VI) The Government Procurement Administration Office of Shanghai Municipality is located in the Municipal Bureau of Finance.

III. Overview of main operations

(I) Budget management
In terms of their structure, financial budgets of Shanghai Municipality consist of municipal-level budgets and budgets at the district and county levels. In terms of budget management, starting from 1994, the central government introduced a financial administrative system of separate taxation for Shanghai and the Municipality has also implemented a financial administrative system of separate taxation for districts and counties. In accordance with the Budget Law of the People's Republic of China, draft budgets and budget performance must be considered and approved by the people's congresses at the same level. Proposed adjustments to budgets and final accounts shall be considered and approved by the standing committees of the people's congresses at the same levels. The budget year shall be from January 1 to December 31 by the Gregorian calendar.

At present, reform of the expenditure management system is under way on an experimental basis in this Municipality, focusing on departmental budgeting and the centralized receipts and payment by the State treasury. These institutional innovations are designed to improve the budget compilation and control mechanisms, gradually establish new and standardized models of expenditure management, strengthen budgetary restraints and increase the efficiency of expenditures. The gradual establishment of a unitary account system of the State treasury will put the financial resources of all departments and units under the centralized management of a unitary account of the State treasury at different levels of finance and payments shall be made from the said account in a centralized manner so as to gradually establish a highly economical and efficient management model with transparency in the operations of financial revenues and expenditures and convenience in receipts and payments.

(II) Taxation management

1. Categories of applicable taxes. Currently, 24 categories of taxes are levied in China. In accordance with the unified provisions of the State, 23 categories of taxes are levied in this Municipality except banquet tax. They fall into 4 broad types:

(1) Circulation taxes, including VAT, consumption tax, business tax and customs duties (collected by the customs).

(2) Income taxes, including enterprise income tax, income tax from foreign invested enterprises and foreign enterprises and individual income tax.

(3) Resource and property taxes, including resource tax, city and town land use tax, farmland occupation tax, housing property tax and urban real estate tax.

(4) Other taxes, including urban maintenance and construction tax, land VAT, stamp tax and vehicle acquisition tax.

2. Administration of tax collection. In accordance with the Law of the PRC on the Administration of Tax Collection and other relevant laws and statutes, tax authorities at different levels in this Municipality exercise the right to collect taxes on behalf of the State, guide tax payers in correctly performing their obligations to pay taxes and organize, manage, supervise and inspect the regular taxation activities in a planned way. The tax collection administration procedure involves mainly tax registration, tax reporting, tax payment collection, management of accounting books and vouchers, tax inspections, handling of violations and settlement of tax-related disputes.

(III) Financial and accounting supervision

Financial supervision, as an integral component of the financial management functions, runs through every link of the financial operations and budget performance and is an important guarantee for the implementation of fiscal policies, the attainment of the targets for economic adjustment and control and the maintenance of financial order. It mainly involves making supervisions to ensure that all departments and units comply with financial laws and regulations, that all enterprises and institutions strengthen their management of State-owned assets and economic accounting and increase their economic efficiency and that enterprises and institutions correctly handle the relationship between the State, collectives and individuals, and strictly enforce financial discipline and cracking down on criminal activities in violation of financial laws and tax laws.

In accordance with the Accounting Law of the PRC, the Municipal Bureau of Finance administers the accounting operations of all departments and units in this Municipality, exercises accounting supervision and deals with violations of laws and discipline through its branch bureaus of finance and taxation, district and county bureaus of finance and the accounting organs of competent departments, so as to ensure the steady improvement of the quality of accounting information.

(IV) Management of government procurement

The Administrative Office of Shanghai Municipality for Government Procurement is a special organ established by the Municipal Government in the Municipal Bureau of Finance, responsible for the day-to-day administration of government procurement in this Municipality. Following the principle of openness, fairness and impartiality in implementing the government procurement policy, it guides the government procurement operations in the whole Municipality and collects and analyzes related information; draws up the draft catalogue for government procurement; examines and verifies the annual government procurement plans; formulates implementation procedures for government procurement; accepts complaints on government procurement; and undertakes other related tasks upon the authorization of the Municipal Government Procurement Committee. Shanghai Municipal Government Procurement Center shall organize and implement centralized procurement or accept the commission to conduct procurement by purchasing parties.