Foreign Firms Shouldering More Of The Tax Burden In China

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

14 March 2002

Figures released by the Chinese State Administration of Taxation (SAT) on Tuesday have revealed that foreign businesses located on the Chinese mainland are shouldering an increasing portion of the country's tax burden.

The SAT revealed that total tax revenue for the first two months of this year reached 266 billion yuan (US$32 billion), an increase of 13% on the same period in 2001. However, the figures also showed that foreign individuals and businesses with overseas parents were paying 29.3% and 45.9% more in income tax respectively than during the same period last year. Chinese companies' contrbutions, meanwhile, have dropped by 7.7%.

This news comes as foreign businesses in China steady themselves for more possible tax increases, following the Government's vows to dismantle preferential packages which were previoysly available for foreign investors.

Nevertheless, overseas interest in investing in the Chinese mainland seemingly continues unabated. A recent survey conducted by Deloitte Touche Tohmatsu and CFO Asia magazine revealed that of the 680 multinational companies surveyed, nearly 90% intended to invest, or expand existing investments in China over the next three years.

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