China Considers Tax Reform - But Not Yet

by Mary Swire, Tax-News.com, Hong Kong

12 April 2002

Speaking to the China Daily news service, senior researcher with the Financial Science Institute under the Ministry of Finance, Liu Shangxi revealed that several major tax reforms are under consideration.

In a report released on Thursday, the news service speculated that changes to the mainland's tax regime on domestic and foreign corporate taxation, the taxation of the country's farming community, and individual taxes could be on the cards, although it seems unlikely that substantial tax cuts will be introduced any time soon, as many feel that it is an inopportune moment for the country to introduce an overall tax-cutting package.

'We could not rule out the possibility of structural tax reductions in some categories,' Mr Liu told China Daily, although he qualified the remark by adding that: 'The economic and social reality of China and the true effects should be put into consideration, when we talk about tax reductions.'

One reform said to be under consideration is the equalization of the tax treatment of domestic firms and foreign funded enterprises. Although this could result in a slight increase in tax levels for the latter group, rates would still be below the national norm, Liu stressed.

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