China to unify corporate income tax rates for domestic, foreign-funded businesses at 25%

China to unify corporate income tax rates for domestic, foreign-funded
businesses at 25%


www.chinaview.cn 2006-12-24 11:29:30


BEIJING, Dec. 24 (Xinhua) -- China's top legislature began
discussing Sunday a new law on corporate income that will unify income
tax rates for domestic and foreign companies at 25 percent.

The draft law was tabled at the 25th session of the 10th Standing
Committee of the National People's Congress (NPC), which convenes from
Dec. 24 to 29.

A unified tax code will create a taxation environment that favors
fair competition among all ventures registered in China, said Finance
Minister Jin Renqing at the meeting.

Different corporate income tax rules were established for domestic
companies in 1991 and overseas companies in 1993 with overseas
companies enjoying a lower tax burden. In recent years, this system has
been hotly debated.

Chinese companies currently pay income tax at a nominal rate of 33
percent, while their foreign counterparts -- who benefit from tax
waivers and incentives to encourage investment in China - pay an
average of 15 percent.

In fact, when all kinds of tax breaks and incentives are taken into
account at both national and local level, domestic companies pay around
24 percent and overseas-funded businesses 14 percent. Many people
believe that the gap is a disadvantage to domestic players who have
been facing tougher competition since China joined the World Trade
Organization in 2001.


Editor: Gao Ying

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