e-magazine
The Hot Zone
China's newly announced air defense identification zone over the East China Sea aims to shore up national security
Current Issue
· Table of Contents
· Editor's Desk
· Previous Issues
· Subscribe to Mag
Subscribe Now >>
Expert's View
World
Nation
Business
Finance
Market Watch
Legal-Ease
North American Report
Forum
Government Documents
Expat's Eye
Health
Science/Technology
Lifestyle
Books
Movies
Backgrounders
Special
Photo Gallery
Blogs
Reader's Service
Learning with
'Beijing Review'
E-mail us
RSS Feeds
PDF Edition
Web-magazine
Reader's Letters
Make Beijing Review your homepage
Hot Links

cheap eyeglasses
Market Avenue
eBeijing

Top Story
Top Story
UPDATED: March 19, 2007 NO.12 MAR.22, 2007
Milestones Mark New Direction
Laws move China a step further down market economy route
By LI LI
Share

Leveling the competition

The Enterprise Income Tax Law is expected to put an end to the taxation honeymoon period enjoyed by foreign investment in China by leveling the competition ground for domestic and foreign-funded companies (including Chinese-foreign equity joint ventures, Chinese-foreign contractual joint ventures, wholly foreign-funded enterprises and foreign enterprises) in paying income tax.

Currently domestic enterprises are required to pay a tax rate of 33 percent while foreign-funded enterprises in some special economic zones are levied at a preferential rate of 24 percent or 15 percent. Although domestic low-profit enterprises can also enjoy special rates of 27 percent or 18 percent according to their conditions, the advantage in taxation for foreign-funded companies is noticeably large. Statistics from the Ministry of Finance show that the average enterprise tax burden for foreign-funded enterprises is 15 percent, while for domestic enterprises it is 25 percent.

This inequality created by ownership-based incentives is inscribed in the current domestic enterprise tax law and foreign-funded enterprise tax law. Both laws were enacted in the early 1990s, when China was going all out to attract foreign investment to develop its economy.

Yet the last 15 years have seen a significant shift in the Chinese economic landscape. According to a UN report at the end of last year, China continued to be the largest foreign direct investment (FDI) destination in the developing world in 2006. Over the four years between 2002 and 2005, the FDI inflow into China grew at an average annual rate of 65.6 percent.

"Actually with the stewardship of the largest foreign exchange reserves in the world, China no longer faces the urgent task of attracting foreign capital," said Professor of Tibet University Zheng Weilie. "What China badly needs now is its own proprietary technology, which foreign companies are very reluctant to give to China."

   Previous   1   2   3   4   Next  



 
Top Story
-Protecting Ocean Rights
-Partners in Defense
-Fighting HIV+'s Stigma
-HIV: Privacy VS. Protection
-Setting the Tone
Related Stories
-The Property Debate
-Property and Tax on the Agenda
 
Most Popular
 
About BEIJINGREVIEW | About beijingreview.com | Rss Feeds | Contact us | Advertising | Subscribe & Service | Make Beijing Review your homepage
Copyright Beijing Review All right reserved