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China to unify corporate income tax systems
(Xinhua)
Updated: 2006-01-18 09:07
China's taxation administration said Tuesday that the administration is still
working on a proposal for a unified income tax system both for domestic and
overseas-funded firms.
Wang Li, deputy director general of the State Administration of Taxation,
said China will push forward the efforts to unify the corporate income taxes
through normal legal procedures, but declined to give a timetable.
China introduced two different corporate income tax systems respectively for
domestic and overseas firms since its 1994 tax reform with overseas firms
enjoying lower tax burden.
Preferential tax offers given to overseas firms helped China attract overseas
investment, technology and expertise, but it does not comply with international
practices and have some negative effect on the development of market economy,
said Wang.
The corporate tax systems need to be unified and regulated, he told a press
conference held by the Information Office of the State Council, the Chinese
cabinet.
The basic idea for the tax reform is to combine the two tax systems into a
unified, transparent and fair one, which will serve the purpose of optimizing
the use of overseas investment and the structure of national economy and
technological upgrading of various sectors, he said.
The actual income tax rate has remained at 14 percent for overseas-funded
businesses, much lower than the 24 percent rate for domestic firms, since China
formulated the preferential policyfor overseas-funded enterprises in mid-1980s
in a bid to lure foreign investment.
Experts and local companies have complained the policy does not comply with
World Trade Organization principles and as a kind of discrimination against
domestic firms, it also results in reduction of China's tax revenues.
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