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Reform of Chinas enterprise income tax, which would end thetaxadvantages enjoyed by foreign-funded companies, has been put onthegovernments agenda.Relevant government departments, includingtheMinistry of Finance and the State Administration of Taxation(SAT),have completed the design of the tax reform scheme, saidZhangPeisen, a senior researcher with the Taxation ResearchInstitute ofthe SAT.The scheme will soon be submitted to the StateCouncil forfurther discussion and to
the National Peoples Congressstandingcommittee for approval, he said.The current enterpriseincome taxpolicies are unfair to domestic companies, saidZhang.China ispractising dual-track income tax policies fordomestic andforeign-funded companies.The income tax rate fordomestic companiesis 33 per cent, while that for foreign-fundedfirms about 17 percent.Domestic companies bear too heavy a taxburden, Zhangsaid.The situation was unfavourable for domesticcompaniesparticipating with international competition, hesaid.Thegovernment should implement a uniform income tax policyfordomestic and foreign-funded companies, he said.Ni Hongri, aseniorresearcher with the State Councils Development ResearchCentre,said there was an urgent need for the government tointroduceequalityotnienterprise income tax policies.Under theexisting taxsystem, foreign companies are actually enjoying highlyfavourabletreatment, she said.This preferential tax policy wasnecessary toattract foreign investment during the early stages ofChinasopening-up and reform.At that time, the tax incentivesresulted inmore advantages than disadvantages, because theyco-existed withnon-tax trade barriers such as the higher tariffsand import quotasenjoyed by domestic companies, said Ni.Now thatChina has become amr of the World Trade Organization, it willnecessarily have togradually remove trade barriers, she said.Thecountry will alsoopen more sectors to foreign investors.The moreopen market needsa fair tax environment for domestic andforeign-funded companies sothat they can compete on an equalfooting, she said.Ni saiduniformity of tax policies would not harmChinas efforts toutilize foreign investment.What foreigncompanies valued most inChina was a stable economic and socialenvironment, not mere taxfavours, she said.The economic miraclecreated by China duringrecent years has made the country a majorattraction to foreigncompanies, she said.A uniform tax policy doesnot mean, she said,the government would no longer offer tax favoursto foreign-fundedcompanies.The government could offer taxincentives to certainforeign-funded companies, as and whenappropriate, and in line withthe requirements of the countrysmacroeconomic development, Nisaid.Professor An Tifu of RenminUniversity of China said thegovernment should have introduceduniform dual-track income taxpolicies before the country joined theWorld Trade Organization in2001.Equal tax treatment for allcompanies is in line with theinternational practice, he said.Thegovernment is likely toimplement the new policy sometime next year,he said.Earlier thisyear, SAT director Xie Xuren said thegovernment had not set atimetable for implementation of the new taxpolicy.We have tochoose a good time to carry out a uniform incometax policy, hesaid.Uniformity of income tax policies should be inline with WTOrequirements and be beneficial to the furtherdevelopment ofChinas opening-up, utilization of foreign investmentandincreasing domestic companies competitiveness, he said.We havetobe very prudent and give careful consideration to the issue,hesaid.Zhang suggested a new tax rate had not yet beendecided,because disparities still exist.Some said the rate shouldbe 25per cent, while others said it should be 27 per cent, hesaid.NiuLi, a senior economist with the State Information Centre,said auniform tax policy spells good news for domesticcompanies.Lesstaxes means more profits, he said.(China Daily)
（信息来源：MOFTEC英文版子站）
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