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Tax Administration for VCEs in China: A Lifecycle Perspective

Author(s)

Yuyao Zhang

Affiliation(s)

Beijing National Accounting Institute, Beijing, China

Abstract

Tax administration, as a crucial component of the business environment, directly impacts the operational efficiency and investment vitality of venture capital enterprises (VCEs). Based on the lifecycle theory, this study segments VCEs into four stages: fundraising, investment, post-investment management, and exit. It then systematically analyzes the key challenges within China's tax administration at each stage. The research identifies several persistent challenges: inconsistent policy interpretation and enforcement across regions, complex and ambiguous criteria for qualifying start-up technology enterprises, inflexible mechanisms for carrying forward losses across periods, passive and lagging policy services, and uncertain exit tax liabilities coupled with inefficient refund processes. To address these issues, a systematic optimization of the tax administration system is proposed. This includes enhancing policy certainty, establishing a cross-cycle tax service mechanism, deepening targeted guidance and risk alerts, strengthening inter-departmental collaboration and co-governance, and leveraging digital technologies. These measures aim to provide theoretical support and practical references for advancing the tax administration of VCEs towards greater professionalism and refinement.

Keywords

Venture Capital; Tax Administration; Lifecycle; Tax Compliance

References

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