China ends foreign firms' "super-national treatment"

14:45, December 01, 2010      

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China began levying the city maintenance and construction tax as well as the education surcharge on foreign-invested enterprises on Dec. 1, 2010, marking the beginning of a fully unified national tax system for domestic and foreign companies, according to an announcement recently issued by the State Council.

Zhang Hanya, president of the Investment Association of China, said on Nov. 30 that China does not impose more taxes on foreign companies than on domestic companies. China's move to unify the tax system is consistent with relevant WTO provisions and shows that the country is gradually moving toward common international rules.

Foreign-invested enterprises have enjoyed more preferential tax and land policies than their Chinese counterparts since the beginning of the reform and opening up because China was in great need of foreign capital and advanced technologies.

In response to the growing call for fair competition, China unified the corporate income tax on domestic and foreign companies at 25 percent starting Jan. 1, 2008. Previously, the corporate income tax rate for foreign companies was 15 percent, much lower than domestic companies' 33 percent. Zhang said that China's new move does not mean its investment environment is deteriorating. Tax policies are not the only factor that attracts foreign capital.

Zhang added that the more than 1.3 billion Chinese people, the status as the world's largest developing country, the rapid economic development and the great market potential are all contributing factors in China's status as one of the most popular investment destinations in the world.

According to statistics from the Ministry of Commerce, China attracted nearly 7.7 billion U.S. dollars of paid-in foreign capital in October 2010, up nearly 8 percent from last year. Its monthly paid-in foreign capital has increased for 15 consecutive months since August 2009.

Furthermore, China attracted more than 82 billion U.S. dollars of foreign investments in the first 10 months of this year, up nearly 16 percent from the same period of last year. These statistics show clearly that China remains an attractive investment destination.

By People's Daily Online

(Editor:祁澍文)

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