Tax Breaks For Foreign-Funded Firms In China To Stay, Top Official Reveals

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

16 January 2003

Speaking on Tuesday, Director of the Chinese State Administration of Taxation, Jin Renqing revealed that - in the short term at least - preferential tax treatment for foreign-funded companies located in China will continue.

Despite ongoing calls to end the dual-track income tax regimes for domestic and foreign-funded companies (with the former taxed at 33% and the latter at 17%), Mr Jin told reporters in Beijing that there is, as yet, no timetable for the removal of the preferential tax rate.

'We are still studying the issue, because it is extremely important. We have to be very prudent and give careful consideration to the issue. And we have to choose a good time to introduce a unified enterprise income tax policy for business,' he explained, adding that:

'We will honour the promises of those incentives granted to old foreign-funded companies and give full consideration to those companies' interests.'

According to reports, the government is considering the adoption of a new single income tax rate for both domestic and foreign enterprises, in line with its obligations to the World Trade Organisation. However, Mr Jin observed on Tuesday that:

'The rate should be acceptable to both domestic and foreign-funded companies.'

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