China To Review Corporate Tax Bill
The Standing Committee of China's National People's Congress, China's highest
legislative organ, is set to review proposals to unify the rate of corporate
tax paid by domestic and foreign-backed enterprises. According to a report by state news service Xinhua, the NPC will review the
legislation on December 24. If approved, it will likely result in an increase
in corporate tax for foreign companies, while domestic entities will see their
corporate tax rate cut. Under current corporate tax law, domestic enterprises pay tax at a rate of
33%, while foreign-backed firms pay 30%. However, foreign companies are able
to utilise deductions and other benefits to whittle down their effective corporate
tax rate to as low as 13%. Details of the new tax policy have yet to be released by the Chinese government,
but it is thought that it will lead to a single rate of corporate tax of about
25% for all companies. Wang Jianfan, vice director of the Ministry of Finance's
tax policy department, also revealed earlier this year that the new laws will
provide tax breaks for firms in certain industries. Government officials have suggested a tentative date of January 2008 for the
introduction of the unified corporate tax law. .
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