Most legislators admit Corporate Income Tax Law fairer for business

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Source: CCTV.com | 03-08-2007 17:01

The corporate income tax law has aroused much debate among legislators and advisors. Most admit the law can help make doing business in China fairer. But some are saying it's not enough.

The dual income-tax structures have long been the subject of intense debate in China. Many Chinese economists, government officials and business leaders have openly criticized the tax policies as unfair. So when lawmakers began considering a new corporate tax law, the news was greeted with fanfare by Chinese companies.

Patrick Choy, CPPCC member, said, "Ever since the the law is a good thing to for the domestic companies."

But does it go far enough? Zhang Jialin is a CPPCC member who also heads a state-owned enterprise. He has his own concerns about the law.

Zhang Jialin, CPPCC member, said, "Well, I think it is a good thing. It allow a unified tax for both foreign and domestic companies to compete fairly. However, fair competition isn't just about a 25 percent tax. It's still not totally equal for the domestic companies on some other taxes."

If the bill is implemented, state coffers will see an expected drop of more than 10 billion US dollars in income tax. But, China's fast growing economy, improved competitiveness, and the growth momentum of fiscal revenue have combined to convince many legislators and advisors that the country can afford the loss.

The bill is very likely to be passed on the session of the NPC. Although the foreign companies will face a higher tax, the advisors believe that China's vast market potential and operational cost advantages will continue to make China a favorable investment option for many overseas investors.

Editor:Du Xiaodan