Digital Yuan as Payment for Local Tax in China

Digital Yuan

Chinese people have begun to use the digital yuan to pay “inter-city” tax bills, eliminating the requirement for wire transfers to local tax authorities through banks. This has become popular since it is something new to China’s mode of tax payment. Plus, it is very convenient.

The first payer to use the digital CNY in this mode, according to the China Securities Network and the People’s Daily, was a guy called Qi, the owner of a small private decor firm in Guangzhou.

Qi was commissioned to complete a project in Zhaoqing’s Dinghu District, for which he was paid. He was therefore legally required to file a declaration to the local tax authority and pay levies on his profits.

Instead of doing the traditional method and sending fiat to the Zhaoqing tax authorities, he opted to take the initiative and pay with the nation’s central bank digital currency (CBDC).

Chinese people have begun to use the digital yuan to pay "inter-city" tax bills, eliminating the requirement for wire transfers to local tax authorities through banks.
Chinese people have begun to use the digital yuan to pay “inter-city” tax bills, eliminating the requirement for wire transfers to local tax authorities through banks.

According to the People’s Daily, Qi was ready to try new things as a young man who pays attention to current trends. He had a pleasant experience with the digital CNY, simply moving tokens from his personal wallet to the Zhaoqing tax authority’s wallet. Guangzhou joined the digital CNY experiment in April.

Various government agencies appear to have actively encouraged residents to pay taxes using the CBDC, stating that the token improves efficiency, is simple to keep, and encourages transparency.

As of the end of April, several government organisations in Zhejiang province were testing methods for paying taxes that involved “the online transfer of digital yuan”. It included the cities of Hangzhou, Shaoxing, and Jinhua introducing digital CNY tax payment systems.

According to the China Securities Network, local officials in Shanghai had also carried out another first for the CBDC, awarding a USD 445,000 “business talent” incentive to an unnamed party in the city.

In other news, the People’s Daily has claimed that a USD 445,000 digital yuan loan had been provided to a cross-border trading business. The business, which looks to be in the e-commerce industry, obtained a loan from a branch of the China Construction Bank. It plans to utilise a portion of the tokens to cover freight train transportation charges to Europe.