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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (21017)	1/11/2005 11:44:33 AM
From: RealMuLan	Respond to of 116555

[I feel so sorry for all the SOEs in China<ng>]--"Foreign firms get pledge on China tax rates" By Allen T. Cheng Bloomberg News Wednesday, January 12, 2005 BEIJING China will maintain preferential tax rates for foreign companies until at least 2007, the nation's top tax official said Tuesday, giving General Electric, BP and others more time to prepare for equal treatment with domestic competitors. . A draft corporate tax law has yet to be submitted to the cabinet and will not be discussed at the annual session of the National People's Congress in March, Xie Xuren, commissioner of the State Administration of Taxation, said at a briefing. Foreign companies are subject to an average 15 percent tax rate, less than half of the 33 percent paid by Chinese companies. . China pledged to equalize tax treatment for foreign and domestic companies when it joined the World Trade Organization in 2001. Overseas investors have urged the government to delay or scrap changes to a system that helped to make the country the world's largest recipient of foreign direct investment. . "You shouldn't fix something that isn't broken," said Emory Williams, chairman of the American Chamber of Commerce in Beijing, which represents 900 companies. "They are smart to carefully consider their strategy. Their strategy has been successful in bringing foreign investments into China." . Lou Jiwei, deputy finance minister, said in February 2004 that the government planned to unify the corporate tax code as early as 2006. The government plans to set a unified tax rate of between 24 percent and 28 percent, Lou said. . General Electric, BP and Siemens are among 54 companies that have lobbied the government to postpone the ending of foreign tax benefits, according to Chinese media reports. The group plans to submit a report to the State Council, or cabinet, asking for a 5-10 year transition period before they are taxed at the same rate as Chinese companies, China Business News said Thursday. . "In the past year we continued to conduct research on formulating a unified corporate tax system as a part of our tax reforms," Xie said at the briefing. "This year, we will continue to do the same and will continue to call for industry input before we make a decision." . The draft law will not be implemented until 2007 at the earliest even if it is passed next year by the National People's Congress, Xie said. . China's tax revenue climbed 26 percent to a record 2.57 trillion yuan, or $311 billion, last year as economic expansion lifted corporate profits and spurred foreign trade, according to the tax administration. . Foreign direct investment in China rose 22 percent in the first 11 months of 2004 from a year earlier to $58 billion, as overseas companies built stores and factories to tap low labor costs and the nation's large consumer market. China drew a record $53 billion of foreign investment in 2003, surpassing the United States as the world's biggest recipient. . Eliminating tax breaks for foreign companies could deter some investors. Chinese companies that are eligible for tax exemptions are also lobbying for the corporate tax law to be delayed, according to Lawrence Sussman, a tax specialist with the U.S. law firm O'Melveny & Myers. . "This is a very tough issue and there are a lot of problems to be overcome," said Sussman, who added that the government had originally planned to unify the tax code this year. "January 2007 is the earliest they can get it done. It may even be delayed another year to 2008." . China plans to continue increasing value-added tax rebates to spur exports even as it moves to end discrimination between foreign and domestic companies, Xie said. China increased export rebates by 106 percent to 420 billion yuan last year, he said. . China says it wants to become an exporter of higher value-added goods such as technology products, and move away from consumer goods and commodity textiles. It also wants to develop exports by its own companies rather than rely on processed exports by multinationals. . China's exports jumped 33 percent in December to a record $63.8 billion, the Commerce Ministry said Tuesday, widening the trade surplus to an all-time high. . iht.com ================================================= [seems to me that this is an official proof that the Chinese gov. now, just like the US gov., is in the pocket of foreign multinational companies<ng>]