Full Text: Explanation on China´s draft enterprise income tax law

II. Guidelines for and principles of the enterprise income tax reform

The guidelines for the enterprise income tax reform are as follows: to establish a scientific and standardized enterprise income tax system uniformly applicable to various types of enterprises and create an environment for fair competition among all enterprises in accordance with the overall requirements of the Scientific Outlook on Development and for improving the socialist market economy by basing the tax reform on the principle of simplifying tax regimes, broadening tax base, lowering tax rates and strictly enforcing administration of tax collection, and by drawing on international experience in this regard.

According to above-mentioned guidelines, the enterprise income tax reform will follow the principles below:

(1) the principle of equalizing tax burden to solve the problem of different tax treatment and largely differentiated tax burden between domestic and foreign-funded enterprises;

(2) the principle of putting into effect the Scientific Outlook on Development to make overall planning for a coordinated economic, social and regional development, promote environmental protection and social progress in an all-round way, and achieve a sustainable development of the national economy;

(3) the principle of giving full play to taxation as a regulatory instrument to promote industrial upgrading and technical progress, and optimize the structure of the national economy as required by the industrial policy of the State;

(4) the principle of referring to international practice to draw on the latest experience of tax reform in the world, and further enhance and improve the enterprise income tax system, and make tax law scientific, complete and forward-looking;

(5) the principle of rationalizing distribution relations to effectively collect fiscal revenues by taking into account both the fiscal affordability of the Government and the burden on taxpayers; and

(6) the principle of facilitating and standardizing tax collection to make tax payment easier and reduce the cost for both taxpayers and tax administrators.