1. Formulating and implementing strategies, policies and guidelines, medium-and-long-term development plan and reform programs of public finance and taxation; participating in macroeconomic policy making; providing policy advice on macroeconomic regulation and balanced allocation of public fund with fiscal instruments; formulating and implementing policies regarding income distribution between the central and local governments and between the state and enterprises.

2. Drafting laws and regulations on public finance and financial and accounting management; laying down and implementing regulations and rules on fiscal, financial and accounting management; organizing negotiations concerning external finance and debts and signing related agreements/accords.

3. Preparing the draft annual budget of the central government and its final accounts; organizing budget implementation; presenting reports on the central and local budgets and the implementation to the National People’s Congress and reports on the final accounts to the Standing Committee of the National People’s Congress on behalf of the State Council; administering the public revenue, the extra-budgetary fund and the special accounts of the central government; administering other governmental funds.

4. Proposing tax legislation plans; reviewing proposals on tax legislation and tax collection regulations with the State Tax Administration before reporting to the State Council; formulating tax collection plans according to the budget; proposing adjustments on tax items, tax rates and tax incentives, including those temporary and special tax incentives that have a major bearing on the central finance; participating in foreign-related tax negotiations and international tariff negotiations; signing foreign-related tax agreements/accords; formulating model tax agreement and convention; performing the secretariat functions for the Tariff/Tax Regulation Committee of the State Council.

5. Administering the central expenditures; formulating and implementing government procurement policies; managing the budgetary non-trade-related foreign exchange of government agencies, public institutions and social organizations as well as budgetary balance of payment; promulgating national uniform standards and policies of some expenditures; formulating and implementing “Accounting Regulation for Public Institutions” and “Accounting Regulation for Government Agencies”; formulating financial regulations on capital construction.

6. Formulating and implementing the policy of distribution between the state and enterprises, managing expenditures from the central coffers to support enterprises; promulgating and implementing “General Principles of Enterprise Accounting”; supervising financial management of the enterprises directly affiliated to the central government and managing the return of state-owned capital; consolidating and analyzing the final annual financial accounts of national enterprises.

7. Administering and supervising the central government expenditures for economic development, the appropriation for central government financed projects, and funds for technological innovation and new product testing; managing central government funds for comprehensive development of agriculture; formulating and supervising implementation of “General Principles on Enterprise Accounting”.

8. Managing the social security expenditures from the central government; formulating the accounting management rules on social security funds; monitoring the utilization of the social security funds.

9. Formulating and implementing policies, rules and regulations on managing government’s domestic debts; preparing plans for treasury bond issuance; formulating policies, rules and regulations on managing government’s external debts; undertaking external negotiations/consultations on loans from foreign governments, World Bank, Asian Development Bank and Japan Bank for International Cooperation; participating in international financial organizations on behalf of the Chinese Government.

10. Formulating and implementing accounting regulations and “Enterprise Accounting Standards”; formulating and monitoring the implementation of the government’s overall budget and accounting regulations governing the government agencies, public institutions and industries; guiding and monitoring the business of certified public accountants and accounting firms; guiding and regulating the auditing business; reviewing and approving the establishment of representative offices and branches of foreign accounting firms in China.

11. Monitoring the implementation of fiscal and tax policies, laws and regulations; identifying the main problems in the management of fiscal revenues and expenditures; proposing policy suggestions on strengthening fiscal management; administering resident offices of Fiscal Supervision Commissioners.

12. Formulating fiscal research and education plans; organizing fiscal training; promoting fiscal information dissemination.

13. Undertaking other assignments of the State Council.

The fiscal system in China is characterized by the sharing of tax revenues between the central government and local governments. According to their respective responsibilities, the central government is responsible mainly for expenditures for national defence,foreign affairs, and the operation of central goverment agencies,as well as expenditures for economic restructuring,development coordination among regions and macroeconomic adjustment, and the local governments are mainly responsible for expenses on the operation of government agencies under their respective jurisdictions,as well as expenditure for economic and social development in their regions.

In accordance with the principle of matching responsibilities with revenues and some other principles, taxes are divided into central government taxes, local government taxes and taxes shared between the central and local governments.Central taxes are those needed for protecting national interests and undertaking macroeconomic regulation.Shared taxes are those directly related to economic developmemt.Local taxes are those that are suitable for collection by local governments. The details are as follows:

Central tax revenues: customs duties; import-related VAT and consumption tax collected by the customs; consumption tax; Enterprises?income tax which is collected from railway and transportation and paid by China?s Post, Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, Construction Bank of China, Development Bank of China, Agricultural Development Bank of China, Import and Export Bank of China, Offshore Petroleum and natural gas Corp, PetroChina Company Limited and China Petroleum &Chemical Corporation;Operation tax, profits and city maintenance tax paid by the railway departments, various banks and various insurance companies; profits handed over by central enterprises and the vessel tonnage tax and vehicle purchase tax for the income with special purposes.

Local tax revenues: Operation tax(excluding the part paid by the railway department, various banks and various insurance companies); profits handed over by local enterprises; city and township land use tax; fixed assets investment orientation regulation tax; city maintenance tax (excluding the part paid by the railway department ,various banks and various insurance companies); house property tax; farmland occupation tax;land appreciation tax;urban real estate tax; vehicle and vessel usage tax; vehicle and vessel usage licence plate tax;deed tax; stamp tax; agriculture tax and animal husbandry tax (including agriculture speciality tax)and Stateowned land use tax.

Tax revenues shared between the central and local governments:
Domestic VAT: 75 per cent for central government and 25 per cent for local governments.
Income Tax: 60 percent for central government and 40 percent for local governments.
Resource Tax: tax paid by offshore oil enterprises goes to the central government, and the rest goes to the local governments.
Stamp tax revenue collected on stock transactions : 97percent goes to the central government, the remaining 3 percent goes to local governments.

State tax agencies and local tax agencies have been established separately. In principle, state taxes and shared taxes are collected by State tax agencies while local taxes are collected by local tax agencies.

The central government returns part of its tax revenue to local governments based on the growth in local government value-added taxes and consumption tax.The central government provides assistance in the form of fiscal transfers to less developed regions and regions inhabited by ethnic minorities.

The budget year corresponds with the calendar year, starting on January 1 and ending on Dec 31. Chinese budget are managed separately by governments at different levels. There are five levels of budget management.The national budget is composed of the central government budget and local government budgets. As stipulated by the Budget Law of the People's Republic of China, the budget draft and budget implementation of the central and local governments must be reviewed and approved by the National People's Congress and local people?s congresses respectively. The central and local budget adjustment plans and final accounts must be reviewed and approved by the Standing Committee of the National People's Congress and local congresses.