Delivering an explanation of the draft tax law to the plenary session of the NPC, the Minister of Finance Jin Renqing said that unifying the two income tax laws will help to "promote improvement in China's economic structure and upgrading of its industries." One of the most important changes enacted by the new tax law is that it applies a preferential rate of 20 percent to small low-profit enterprises and 15 percent to hi-tech enterprises receiving priority support from the state. The law also grants incentives to enterprises investing in environmental protection, energy and water conservation and work safety.

To soften the impact of fattening tax burdens on foreign-funded companies, the new tax law will be implemented over a transitional period of five years. Although it may be seen to have a long-term impact on foreign investment growth momentum in China, a number of foreign companies have shown an understanding of the change.

Hao Jikuan is an NPC deputy and Chairman of Hong Kong-based Viction Group, which, with Japanese companies, co-owns a business in the Inner Mongolia Autonomous Region. Although his company will have to pay a higher level of income tax, he gives the new law his total support. "In the past, China implemented different taxation rates for domestic enterprises and foreign companies, which I think suited national conditions," he said. "Yet with economic development and a balancing of the economic situation at home and abroad, I think it is time to readjust the taxation rate for foreign companies. I think such a change would be understood and wouldn't exert noticeable negative impacts on economic growth."

NPC deputy Jiang Hongbin is also the president of a Heilongjiang-based joint venture between Thailand and China. He said the new tax law would nurture a fairer competitive environment between domestic companies and foreign-funded firms. "When we were given preferential treatment, it was for us to grow smoothly. Now it is time for us to stand back on the starting line with companies of different ownership," said Jiang. When asked whether he has given any suggestions on the law at the NPC session, he said, "I did. My suggestion was that the law should take effect as early as possible."

Top Legislature Adopts 15 Laws Since March 2006 The Standing Committee of the Tenth National People's Congress (NPC) deliberated on more than 20 draft laws and law-related resolutions and adopted 15 of them since March 2006. On August 27, 2006, the NPC Standing Committee passed the Supervision Law of the Standing Committees of People's Congresses at Various Levels, to help lawmakers supervise the government. Under the Supervision Law, the standing committees of people's congresses at and above the county level are authorized to repeal any inappropriate decisions or orders issued by government at the same level. The law also allows standing committees to summon government officials to explain their work and policies. The NPC Standing Committee also passed the Corporate Bankruptcy Law last August, to provide protection to both creditors and workers of insolvent companies. On October 31, 2006, the NPC Standing Committee adopted an amendment to the Organic Law of the People's Courts to exert strict control over the use of the death penalty. The amendment ruled all death penalties imposed by provincial courts must be reviewed by the Supreme People's Court starting from January 1 this year. The Supreme People's Court would then review evidence, the law's application, and the litigation process in the previous trial and hear the defendant either in person or by letters, before reaching a final decision. NPC Standing Committee members also adopted resolutions on December 29 last year to submit drafts of the Property Law to the fifth full session of the national legislature for further deliberation. In addition, the NPC standing Committee deliberated other law drafts including a draft of the Labor Contract Law, and has passed amendments to the Law on Compulsory Education, the Banking Supervision Law, and the Law on the Protection of Minors. A series of new laws and regulations including the Law on Specialized Peasants Cooperatives, the Passport Law, the Law on Farm Produce Quality Safety, and the Anti-Money Laundering Law, were also passed by the NPC Standing Committee. source: Xinhua