China will establish a comprehensive system to monitor foreign companies' profitability in order to curb cross-border tax evasion, the State Administration of Taxation (SAT) announced on December 1.

The move is one of several steps against tax avoidance taken by the agency to protect the country's interests as the world's top destination for foreign direct investment.

The system will allow the agency to acquire profit information on foreign companies so that it can launch "targeted actions" and use information technology to prevent companies from shifting profits overseas, said Zhang Zhiyong, Deputy Director of the SAT.

The ongoing campaign against corporate tax dodging has rippled through the foreign business community in China, following the government's move to levy $140 million in back taxes on U.S.-based Microsoft Corp. Microsoft has denied that it practiced tax avoidance.