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China Stalls On Corporate Tax Harmonisation

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

17 December 2001


The China Daily reports that the State has decided to offer foreign companies a further period of up to five years in which they can enjoy favourable taxes before they have to pay a higher corporate tax rate.

Initially the higher tax rate was to be introduced in order to more harmonize the tax difference between domestic and foreign firms as soon as possible, now that the country has joined the World Trade Organization, but a senior tax official has told the newspaper that the preferential tax policy has proven lucrative for the government and plays a key role in China's economic growth and it doesn't wish to let go of the policy just yet.

'We will not change the policy, but we are striving for a more equal way for overseas and domestic enterprises,' said Zhang Zhigang, vice-minister of the State Economic Trade Commission (SETC). Currently mainland companies pay a standard 33 per cent, while the foreign companies pay 15 per cent.


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