China mulls same tax rate for local, overseas firms
Afp, Beijing
Chinese lawmakers on Sunday mulled a draft law that would impose a 25 percent income tax on both domestic and foreign firms, eliminating the preferential rate for overseas companies, state media said. The taxation bill was unveiled to the Standing Committee of the National People's Congress -- China's top legislature -- at the start of a week-long session due to end Friday, Xinhua news agency reported. Currently, domestic companies are taxed at a rate of 24 percent on average, while foreign-funded firms only pay about 14 percent -- a gap that has sparked controversy in recent years. Finance Minister Jin Renqing told committee members at the opening of the session that a unified tax code would foster fair competition among all businesses operating in the country. China originally adopted a two-tier tax system in the 1980s to attract foreign investment. Those rules were signed into law in the 1990s, but have since been condemned by domestic companies facing tough competition since China joined the World Trade Organization in 2001. China's tax authorities said at the start of the year that they would work to create a unified tax code.
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