In December 2009, within just weeks of the issuance of several controversial (and arguably ultra vires) tax circulars by the Ministry of Finance (MOF) and by the State Administration of Taxation (SAT), the SAT promulgated a seminal regulation governing informal rulemaking activities of all tax authorities in China. This regulation took effect on 1 July 2010 and promises to significantly improve the clarity, transparency, predictability and quality of rulemaking on taxation in the PRC Ironically, it can also be seen as a rebuke to a cynical view that is rather prevalent among Chinese tax practitioners and reinforced by the recent problematic tax circulars: namely, that because the PRC government does not care about creating order in tax administration and taxpayers are unwilling or are unable to enforce their rights, informal rules issued by the government should be given full weight even if they contradict laws created by higher authority and/or are inconsistent with each other. The new SAT regulation on informal rulemaking is just one illustration of the dynamic development of the rule of law in taxation in China. This article uses the enactment of the new regulation as an occasion for examining the question: what is the 'law' in Chinese tax administration?
