Abstract: The right of deduction is a core right enjoyed by taxpayers of value-added tax, which follows a unique restrictive operation mode. It usually adopts a legislative structure of “general allowable deduction rules + exceptional restriction rules”, and the actual operation trajectory of the right of deduction is defined by the exceptional restriction rules. Although the state may impose necessary restrictions on taxpayers’ exercise of deduction rights based on the legislative goals such as safeguarding the right to survival, economic taxation, and preventing tax evasion, the restriction measures should be kept within a moderate range. The Chinese tax law field exhibits a legal operation pattern dominated by the administrative interpretation power. The Ministry of Finance and the State Administration of Taxation, as the competent financial and tax authorities, frequently formulate financial and tax normative documents to add restrictive measures to taxpayers’ deduction rights, resulting in too many restrictive rules, lack of certainty in restrictive rules, and doubts about the legitimacy of some restrictive measures. The expansion of this tax administrative interpretation power is constrained by the management and taxation concept, as well as the lack of external restrictions and procedural rationality. In this regard, relief can be provided from three dimensions: entity adjustment, procedural improvement, and post supervision. Guided by the concept of tax governance and using legal principles as tools, we can optimize substantive legal rules such as tax exemption and invoice deduction, improve the dual review system for the formulation of financial and tax normative documents, and establish a two-level review system for document formulation and implementation.

Key words: deduction rights, administrative interpretation power, excessive restriction tax, normative documents