NPC members hail unified tax law

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Source: CCTV.com | 12-26-2006 13:05

Standing Committee Members of the National People's Congress have unanimously agreed on the need for a single law on corporate income tax. They feel the tax uniformity will create an environment of fair competition for all enterprises.

The current lower rate of income tax for foreign enterprises was established in the early 1980s to attract foreign funds.

At present, the average tax rate for foreign enterprises in China is 15%. In contrast, local businesses pay a rate as high as 33%.

Standing Committee Members at the NPC now feel the current corporate income tax system does not suit a country undergoing rapid economic growth. This is especially relevant, with China just marking an end to a five-year transition period following entry into the World Trade Organization.

Members have proposed that the new average rate for both local and foreign enterprises be set at 25%.

Cong Bin, Standing Committee Member, NPC, said, "Generally speaking, the enterprises' actual tax burden will be lightened. And there will be a cushioning period for those foreign companies taxed at a lower rate. On the other hand, with the last few years seeing increased momentum in revenue growth, the Chinese economy should be able to get through this."

NPC lawmakers believe the draft law reflects demands to fine-tune the socialist market economy. They also think measures in the new law are practicable.

The new law will continue to favor high-tech businesses and small enterprises with narrow profit-margins.

Chen Xiaoping, NPC deputy entrepreneur from Fujian province, said, "We are very much looking forward to the passing of the law. This will make us more dynamic in plans to expand our business."

The NPC Standing Committee said the draft comes at the right time, and will help maintain continuity and stability of the reform and opening policies.

In fact, debates on a unified corporate income tax law have been brewing for a long time.

But the latest development means a single tax is now one step closer to fruition. The NPC

Standing Committee will vote on it at the end of this month to decide whether to forward the draft to the NPC's full session in March next year, for final approval.

Editor:Du Xiaodan