Zhu Mengzhen and Her Study on New Zealand

09/10/2019 Zhu Mengzhen, a PKU law student got her Master’s degree on New Zealand tax laws “Goods and Services Tax Value-added Tax Law Design Taxation Essentials ‘supply’ ”in May, supervised by was Associate Professor Ye Shan. 

Zhu Mengzhen of the School of Law completed her MA thesis studying New Zealand tax laws “Goods and Services Tax Value-added Tax Law Design Taxation Essentials ‘supply’ ”in May, supervised by was Associate Professor Ye Shan. 

The thesis introduces that New Zealand’s goods and services tax, introduced in 1986, is the closest vat to the ideal model worldwide. From the time point of view, china began to collect vat from the 1980s when New Zealand introduced vat in almost the same time and space background. The tax system design is largely influenced by the mature traditional vat system in Europe, but affected by different political, economic, and legal environment, the development direction of the vat system in the two countries is completely different, and consequently different vat practices. Moreover, to a certain extent, New Zealand’s vat seems to have become a more desirable type of vat, called modern vat, which is different from the traditional vat in Europe. China’s vat system has basically taken shape, but it is far from ideal, and it is still necessary to be optimized according to the current national conditions and the international environment.

After the “transformation” and “expansion” reform, china's value-added tax system has matured and there are some similarities with the New Zealand goods and services tax system. However, the current vat system does not respond well to the five requirements of china’s economic and social development, of which the low legislative level, the proliferation of normative documents can be said to be the major drawbacks of the current vat legislation. The vat law, which is currently being drafted, should be designed with appropriate reference to New Zealand’s experience.

This thesis first reviews the history of the introduction of New Zealand’s goods and services tax, and holds the point of view that New Zealand’s political system, economic development background and taxation system are important bases for New Zealand’s introduction of goods and services tax. In terms of political system, New Zealand’s highly centralized political structure, relatively stable political party system and flat administrative system are the guarantees for the formulation and effective implementation of New Zealand’s goods and services tax; in terms of economic development background, New Zealand’s tax system reforms along with its economic development. Inseparable, the five economic development environments and demand are main factors driving the formation of the tax system for goods and services.

Secondly, this thesis starts from the formulation of New Zealand’s goods and services tax law and its implementation mechanism, introduces and analyzes the main design features of New Zealand's goods and services tax system around taxation subject, tax basis, tax rate and other taxation essentials. Based on the design of New Zealand law, china's current vat system is examined following the logic of core taxation essential system. this paper argues that the most prominent feature of New Zealand’s goods and services tax is that it follows the logic of tax legislation from qualitative to quantitative, and it only highlights the decisive role of “supply” on the taxability of trading behavior. The supply chain is connected in series to ensure the integrity of the vat system. As far as china's vat legislation is concerned, there are something we can learn from New Zealand's experience, which is closely design the vat law around “supply”, harmonize the taxpayer's classification standards, and simplify the taxation of vat to achieve universal imposition of value-added tax and maintain the neutrality and simplification of value-added tax system.

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