Finance Minister Jin Renqing said Friday that the corporate
income tax law now under parliament deliberation is expected to
take effect as of Jan. 1, 2008, if it is passed at the ongoing
annual session of the National People's Congress (NPC), or
parliament.
The draft law, which proposes unifying the corporate income tax
rate of domestic and overseas-funded companies at 25 percent, was
submitted to nearly 3,000 NPC deputies for examination on
Thursday.
Overseas-funded companies in China have long enjoyed a
preferential income tax rate of 15 percent while Chinese companies
have to pay the tax at the rate of 25 percent.
According to the draft corporate income tax law, the tax rate
rise for overseas-funded companies would result in a total tax levy
of 43 billion yuan (US$5.5 billion) a year after a five-year
transition period.
"Compared with the rich profits of the overseas-funded
companies, it will not be a big financial burden to them, nor will
it affect their enthusiasm for investment in China," Jin said at a
press conference on the sidelines of the NPC annual session.
In response to a Taiwan reporter's question about the impact of
the unified tax rate on companies with investment from Hong Kong,
Macao and Taiwan, Jin said that most of them will continue to enjoy
the preferential tax rate to be maintained.
While unifying the tax rate, the draft law maintains the
preferential tax rate for some industries, including the high-tech
industry, to which the income tax rate remains at 15 percent, Jin
said.
Companies with Hong Kong, Macao and Taiwan investment will also
enjoy this rate, he added.
The draft law also applies a preferential rate of 20 percent to
eligible small low-profit enterprises.
Jin estimated that some 60 percent of the companies with
investment from Hong Kong, Macao and Taiwan are enterprises of this
category, and the tax rate only grows by five percentage points for
them.
The NPC deputies will cast vote for or against the draft law
along with a draft property law before the session concludes next
Friday.
(Xinhua News Agency March 9, 2007)