The city of Huizhou, in China’s Guangdong Province, has announced that businesses can now use the digital yuan – China’s central bank digital currency (CBDC) – to make tax payments.
Per HZ News, a construction firm named Huizhou Puli Curtain Wall Engineering recently became the first firm in city’s Huiyang District to pay its urban maintenance and construction tax bills using the CBDC. The firm also paid a value-added tax (VAT) bill using the digital yuan.
The company was quoted as stating:
“We were fortunate to be the first to experience paying taxes with the digital yuan. The payment process is very smooth and the experience was great.”
The central People’s Bank of China (PBoC) has sought to allay fears about the lack of privacy in digital yuan payments. It has recently claimed that “controllable anonymity” functions are built into the CBDC.
Huizhou authorities claimed that the costs involved with digital yuan tax payments were zero, while such payments were also “faster” and “easier.” They added that the CBDC also allowed payees to enjoy “stronger privacy.”
Why Are Chinese Cities Adopting Digital Yuan Tax Payment Platforms?
The authorities added that businesses could do away with the need to open multiple bank accounts when doing cross-province business if they paid their taxes using the e-CNY.
They added that the token would “solve the problem of taxpayers” needing to sign “tripartite agreements across provinces.”
This will help firms “reduce energy costs.” And it will let them do away with handling fees for inter-bank and inter-regional fund transfers, the authorities explained.
Per a report from Tom.com, researchers at Baihui Securities believe that China’s “digital economy” is worth $582 million – making it the largest in the world.
The media outlet noted that a recently launched Hong Kong “cross-border” pilot was highly significant for the PBoC. It explained that Hong Kong is a “global financial center” and the largest offshore yuan center in the world.
Hong Kong’s yuan-related financial services include CNY clearing, settlements, financing, asset management, and risk management.
The media outlet explained that the “development of digital yuan” would “naturally enhance competitiveness and provide important support for the continued growth of Hong Kong’s financial center.”
Other Chinese cities have also this month expressed their intentions to pursue “cross-border” applications for the digital yuan.
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