Yesterday, a top tax official at a press conference on the
sidelines of the annual session of the 10th
National People's Congress (NPC) said that moves to unify
income tax burdens for domestic and overseas-funded firms will be
sped up.
Xie Xuren, director general of the State Administration of
Taxation, said at the Great Hall of the People in Beijing: "We have
to adapt to conditions following our entry into the WTO in 2001 and
boost fair competition among all businesses."
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The NPC has listed the Law on Enterprises' Income Tax in its
legislative plan for 2005.
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NPC deputy Cheng Faguang, a member of the NPC Financial and
Economic Committee, had said earlier on Wednesday that the income
tax rates might be unified in 2008. "This was in my most optimistic
forecast," he told Xinhua.
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Xie said his administration has carried out in-depth research on
the issue with other departments, and would accelerate taxation
reform in line with legislative procedures.
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The actual income tax rate has remained at 14 percent for
overseas-funded businesses, much lower than the 24 percent for
domestic firms, since the formulation of a preferential policy in
the mid-1980s in a bid to attract foreign investment.
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Experts and local companies have complained that the policy does
not comply with WTO principles and is a kind of discrimination
against domestic firms, as well as reducing tax revenue.
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Xie said it would also be necessary to raise the baseline of
personal income tax due to increases in urban salaries and personal
expenditure.
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He said the Ministry of Finance and the tax administration have
drafted a preliminary plan for the raise and will submit it to the
State Council, China's cabinet. It will then go to the NPC for
further deliberation and, once approved, the current law will be
amended, Xie explained.
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Chinese citizens pay personal income tax on their salary and ten
other forms of income. Since 1980, income over 800 yuan (US$97) has
been taxed, though this has been adjusted in some areas of the
country. Without a rise in the baseline, there are concerns that
the wealth gap will only increase.
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At the same press conference, Finance Minister Jin
Renqing expressed confidence in financing reform of state-owned
commercial banks.
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"We have to pay for the transformation of state-owned banks into
joint-stock banks and for their asset reshuffle, and the Treasury
is ready to foot the bill," said Jin.
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Jin said the Finance Ministry has issued 270 billion yuan (US$32.5
billion) in treasury bonds to boost the sector, and will probably
finance the separation of an additional 1.4 trillion yuan (US$168
billion) of non-performing assets from state-owned banks.
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Jin also said the government is determined to levy fuel tax, but
needs to find an "opportune time" to do it. The aim would be to
help cut consumption of gasoline and diesel oil and preserve the
environment.
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To maintain stable prices, "we need further study on how to balance
the interests of various social groups," said the minister, adding
that it would be unwise to introduce fuel tax when oil prices are
soaring on the international market.
(Xinhua News Agency March 10, 2005)