Unofficial reports were circulating in mainland China yesterday that the threatened unification of the corporate tax rates for domestic and foreign companies will take place next year. Although the Government has on several occasions said that it would abolish the tax concessions currently offered to foreign companies, this is the first occasion on which a particular date has been mentioned.
At present, companies with foreign ownership or investment pay a rate of between 24% and 27%, and in the Shenzhen, Xiamen, Shantou, Zhuhai and Hainan special economic zones they pay a 15% corporate tax rate. The mainstream rate of corporation tax is 33%.
The mainland Economic Daily yesterday quoted Finance Minister Xiang Huaicheng as saying that foreign corporate income tax and domestic corporate income tax would be unified next year, although the Finance Ministry refused to comment on the report. Speculation is that a unified rate to apply to all companies would be 24% or 25%.
Standardisation of corporate tax rates is nearly inevitable following China's WTO entry, although concessions in Special Economic Zones could be continued, it is thought.
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