The draft law on corporate income tax is currently under discussion at the fifth session of the 10th National People's Congress. How do multinational enterprises in China feel about this draft law, which indicates a major adjustment in China's policy on foreign investment?
A reporter from People's Daily Overseas Edition recently spoke with Eric Legros, the CEO of Carrefour China Inc., Frank Lyn Yee Chon, China market leader of one of the world's top four accounting firms, PricewaterhouseCoopers, and Cassie Wong, China Tax Leader at PricewaterhouseCoopers.
We are closely tied to China
Q: What are your major concerns in the two sessions of the NPC and the CPPCC?
Eric Legros: As the first foreign-funded retail company to enter China, Carrefour pays very close attention to the annual meeting of the two sessions. This year, we have particularly noticed the issue of the unified income tax system in the draft law on corporate income tax.
Frank Lyn Yee Chon: As a foreign-funded enterprise that is deeply rooted in China, PricewaterhouseCoopers' success tied closely to China's economic development. We have closely followed the two sessions for years because it helps us to see what direction development in China will take next. This year, in addition to important documents that reflect China's economic trends and the future economic direction of the government, we are particularly concerned about the issues that are close to our company and customers, such as the unified income tax system and the promotion of the development of modern service industry.
New tax law to attract more lasting foreign investment
Q: What do you think of the draft law on corporate income tax?
Cassie Wong: The reform of China's tax system replaces the current tax policies with regional-based preferences supplemented by industrial-based preferences by the new tax policies with industrial-based preferences supplemented by regional preferences. The purpose of this reform is to give more support to the country's industrial policy and the economic development of its old industrial bases in central and western regions and northeast China, to promote industrial upgrading, and to narrow the gap in economic development between regions. The adjustment of the foreign investment policy will help create a more equal, standardized and transparent business environment, stimulate the sense of competitiveness between enterprises in the long term, and, play an active role in promoting the overall economic activity of the country. We believe that the ever-improving operating environment will promote the sustainable development of both domestic and foreign-invested enterprises.
Eric Legros: The adjustment of the Corporate Income Tax Law is a major policy adjustment. We welcome all related policies, laws and regulations that are conducive to promoting the development of enterprises, standardizing the market order, and improving the investment environment. Moreover, we will implement and follow all these regulations. The unified income tax system will not affect Carrefour's investment confidence in China.
Tax burden not the only consideration
Q: Will the unified tax system affect the intensity of foreign investment in China?
Cassie Wong: Not all incentives will be abolished in the reform of the unified tax system. Some industries will not be affected by it. For example, high-tech industries and some other industries that are supported by the State will continue to enjoy a variety of tax incentives. The unified tax system has been under discussion for some time. Many enterprises have made plans accordingly, doing things such as accelerating the pace of investment to reduce the impact.
In the short term, the unified tax system may affect some sectors of some enterprises. However, in the long term, the new income tax law will help realize an equal tax policy for domestic and foreign-funded enterprises and improve the quality and amount of foreign investment in China. Moreover, the tax burden is not the foreign enterprises' only consideration. A mature regulatory environment for businesses, high-quality and relatively cheap labor, good infrastructure and, most importantly, space for significant market development, are all factors foreign investors consider when making decisions. There is no doubt that China has strengths in these areas.
Investment environment improving
Q: Are you satisfied with the development of your company in China?
Frank Lyn Yee Chon: All along, the Chinese government has been making great efforts to improve the investment and operating environment. Its determination and hard work are obvious to all. We have always expressed our profound admiration and appreciation of this. The increase in foreign investment is also evident.
As the world's largest accounting company and a leading company in the professional accounting services sector in China, PricewaterhouseCoopers is satisfied with the progression of its development in the country. We have 12 branch offices across mainland China, Hong Kong and Macao. We have nearly 8,000 employees, including 270 partners and leaders. In the next few years, we estimate that the number of employees will increase by 50 percent. In the past year, PricewaterhouseCoopers has helped 21 Chinese enterprises get listed in Hong Kong and Shanghai, and to raise a total of US$22.4 billion. To date, we have invested US$200 million in China. In the next few years we will increase our investment in the country to further promote our business in here.
Eric Legros: We are very glad to see that China is endeavoring to improve its investment environment. We will continue to endeavor to provide Chinese consumers with better products and a more comfortable shopping environment.
By People's Daily Online