Source: CCTV.com

12-30-2008 08:59

A group of overseas banks in China has asked the Chinese government to delay implementing a new tax on interest paid on borrowings from overseas. A petition has been signed by 36 foreign lenders.

China is starting to levy a 10 percent withholding tax, retroactive to January 1, on interest payments on all loans to banks in China from overseas lenders. A lower rate of 7 percent will be placed on lenders from Hong Kong.

A group of overseas banks in China has asked the Chinese  government to delay implementing a new tax on interest  paid on borrowings from overseas.

The 36 overseas banks say the tax is an excessive burden on their China operations, which have small deposit bases and are more reliant than local rivals on borrowing from their overseas parent companies.

But Chinese economists argue that since interest rates in China are substantially higher than overseas rates, borrowing from overseas will give overseas banks unfair advantages.

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Editor:Xiong Qu