Multinationals yearn for better service

Firms need clear rules, certainty to remain in compliance with tax law, says expert

Heightened scrutiny of foreign companies' tax practices is a sign of China's effort to modernize its taxation system to keep up with the fast-changing international business environment, but there is another dimension that concerns the foreign business community - service.

The latest example of the unprecedented effort to plug tax loopholes is the release of a new interpretation on foreign companies' indirect transfers. Under the Corporate Income Tax Law, gains arising from a direct transfer of properties in China are subject to corporate income tax, while those arising from an indirect transfer are not.