China to add two taxes on foreign firms

By Gao Yuan (
Updated: 2010-10-22 15:03
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Foreign companies operating in China will pay the same taxes as their Chinese competitors starting Dec 1, Securities Daily reported Friday.

According to a notification issued by the State Council, foreign-invested companies will pay two taxes called the Urban Maintenance and Construction Tax and Extra Charges of Education Funds beginning Dec 1.

The two taxes were launched in China in 1985 and 1986 respectively.

In order to boost foreign investment, foreign-owned and foreign-invested companies have been exempted the two taxes since 1994.

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The 300-word notice creates equality of taxes paid by foreign companies and domestic companies, the report said.

Some analysts worry that the equitable taxation policy might dampen foreign investments.

Officials from the Ministry of Finance and State Administration of Taxation told the newspaper that the purpose of the new policy is not to add burden on foreign enterprises, but to create an environment for fair competition.