China Wants to level corporate income tax rates
Domestic Chineses companies pay income tax at a 33% rate. Foreign companies, because of tax waivers and incentives to encourage investment in China, pay about 15%.
When all tax breaks and incentives are considered, Chinese companies pay around 24% to their foreign counterpart's 14%.
Since China has entered the WTO, some feel that Chinese companies are now at a severe disadvantage.
The proposal is to have a 25% tax rate across the board – in line with other countries and regions and with international rates.
The two-year full exemption and three-year partial exemption for overseas companies will also be history.
Export-oriented foreign-funded businesses will see their special 50% tax break exported once and for all.
The new tax structure will be a boon for domestic companies, and foreign companies that are already deep in China will have no alternative other than to pony up more.
However, new companies are likely to hold back on investing or starting up in China.
Maybe China thinks it has enough help from overseas?
What do you think?
I think this is unfair because the tax laws are just not enforced against domestic companies and yet, their enforcement (and the enforcement of other laws, such as registration) are rapidly increasing against foreign companies. Equalizing the tax structure will only create greater unfairness and inequality.
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