BIZCHINA> Taxation
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BIZCHINA> Taxation
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Tax reforms set to continue in 2007
By Hong Guan (China Daily)
Updated: 2007-01-25 18:53 Tax chief Xie Xuren yesterday said reforms will continue in 2007. State Administration of Taxation (SAT) commissioner Xie said the reform process would continue in a "steady and cautious manner." He mentioned a host of taxes, including corporate income tax, value-added tax (VAT), the resources tax and taxes on land use, among others, which will be covered by the reforms. Currently reforms of these taxes are at different stages. At the top of the reform agenda is the unification of different corporate income tax rates for domestic and foreign companies. The Corporate Income Tax Law was passed by the Standing Committee of the National People's Congress (NPC), the national legislature, in December, and is expected to be endorsed at the NPC's annual plenum in March. Wang Li, SAT deputy commissioner, said it is high time the country adopted a single corporate income tax rate. At the moment, the rate stands at 15 percent for foreign companies, but 33 percent for their domestic peers. Experts said it was understandable that China offered tax breaks and preferential rates for foreign players when the country's business environment was immature. But the arrangement is no longer suitable now a market-based economic system is taking shape, said Zhang Peisen, a senior researcher with the Taxation Research Institute under SAT. China is now at a stage when different rates are detrimental to fair competition, he said. Deputy Commissioner Wang said the different rates had encouraged domestic firms to disguise themselves as foreign companies to claim the preferential rate, creating further economic distortions. (For more biz stories, please visit Industries)
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