Changsha, capital city of Central China's Hunan province, successfully pioneered its digital RMB application to the whole process of tax payment on Saturday, and became the first city in China to achieve that goal.
After taxpayers in Changsha open a "digital renminbi" wallet, they can choose any of the four methods—Hunan Provincial Electronic Taxation Bureau, mobile banking app or online banking, taxation hall, and bank counter—to pay taxes in digital renminbi. The entire process of payment to the national treasury and reconciliation is carried out through digital renminbi.
Bai Wenxi, chief economist at IPG China, told Securities Daily that Changsha took the lead in opening the digital renminbi tax payment system, and it greatly enriched the application scenarios of digital renminbi and also made the whole process more convenient and efficient.
The application of digital renminbi in tax payment can save on transaction costs while ensuring authenticity and security, in order to improve the efficiency of the payment process, said Su Xiaorui, an analyst from Beijing-based consultancy Analysys, as quoted by Securities Daily. Su added that features such as controllable anonymity lay a solid foundation for the use of digital renminbi to deal with tax evasion.
Apart from Changsha, Shenzhen, Beijing, Xiong'an New Area, Hainan and Shanghai have also practiced partial tax payment services in digital renminbi.
In October, a resident from Hong Kong, who started a business in Shenzhen, first used digital renminbi to pay his personal income tax in the city; in November, the Beijing Municipal Taxation Bureau handled the commissioned tax collection through digital renminbi payment, the first case in the city; and Xiong'an New Area successfully implemented tax payment service via digital renminbi at a bank branch this month.
Zheng Lei, chief economist at Glory Sun Financial Group, said to Securities Daily that tax payment is a popular scenario for digital renminbi application. And digital renminbi will circulate like paper money in the future.
Unlike other electronic payment methods, digital renminbi will circulate in the same currency payment and circulation environment, which can leave traces and enable supervision throughout the whole process, Zheng said, adding that digital renminbi is an electronic form of cash. If all paper currency is replaced, the transparency and traceability of currency circulation will be improved.
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