Speaking at a conference at the weekend, president of the Chinese Finance Ministry's Institute of Fiscal Science, Jia Kang confirmed that the preferential tax treatment of foreign firms in China will end in 2007, according to reports.
The move to equalise the tax treatment of domestic and overseas companies is likely to disappoint foreign firms, which have protested earlier proposals to increase their tax bill. However, the Chinese authorities view the move as necessary in order to increase tax revenues, and encourage "fair competition" in the business sector.
"Our goal is to treat every investor equally, no matter if they are from home or abroad," Jia was quoted by the China Daily as telling delegates.
Foreign firms operating in China have, however, been assured that they will benefit from a transition period of at least five years in the run up to the unification of the Chinese corporate tax system.
In January, 54 major international companies joined forces to lobby the Chinese government, accepting the need for unification, but asking for a transition period of five to ten years, a request which has now effectively been granted.
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