China Information

Saturday, December 30, 2006

Ministry of Finance: The Unification of Income Tax Rates for Foreign and Domestic-invested Enterprises Will Not Suppress Foreign Investment

Shi Yaobin, director of Tax Administrative Department of the Ministry of Finance of China said on December 29 that the unification of income tax rates for foreign and domestic-invested enterprises would not suppress or affect the access of foreign investment into China but create a more standard and transparent investment environment for them. Shi Yaobin said the draft of the modified enterprise income tax law uniformly prescribe the income tax rates for foreign and domestic-invested enterprises at 25%, which is slightly higher for the above-mentioned enterprises that adopt the preferential tax rates. However, most of the foreign-invested enterprises in China are currently high-tech enterprises and the new tax law has clearly provided that the high-tech enterprises are under key supports and keep on adopting the tax rate of 15%. Such preferential practices will be extended to all the areas across the country, which is applicable to all the hi-tech enterprises. From such viewpoint, most of the foreign-invested enterprises will not be under a big impact, and the tax rates they enjoy are basically consistent.

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