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China Amends Corporate Income Tax Law for First Time in 10 Years


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(YicaiGlobal) Feb. 20 — China’s national legislature, the National People’s Congress (NPC), will hold a meeting this week to deliberate on a draft amendment to the corporate income tax law proposed by the State Council. A tax expert suggested that the NPC may consider lowering the corporate income tax rate to around 22 percent from 25 percent.

An executive meeting of the NPC will first discuss the draft amendment on Feb. 22.

It will be the first amendment to the law since its promulgation 10 years ago. Corporate tax cuts were eagerly anticipated, but the government has so far not confirmed that the corporate income tax would be lowered, experts told Yicai Global.

Given the corporate tax reduction and decentralization principles laid down for the supply-side structural reforms and that a new wave of tax cuts worldwide triggered by tax-cut plans of the Trump Administration, the corporate income tax rate may be lowered through the amendment and relevant tax incentives could be strengthened, said Professor Liu Jianwen at Peking University Law School.

Lowering the corporate income tax rate will soften the impact of tax cuts proposed by US President Donald Trump, he said.

There could also be new changes in anti-tax evasion regulations, Liu suggested, saying China signed tax treaties with some countries in recent years, and there had been changes in international anti-tax avoidance policies, and these may be reflected in the amended corporate income tax law.

The corporate income tax law was approved by the NPC in March 2007, and went into effect on Jan. 1, 2008. The tax has been levied at 25 percent on enterprises that generate revenue in China, with lower rates offered for microbusinesses and high-tech companies.

The corporate income tax is the second largest tax in China after value-added tax (VAT). Corporate income taxes collected in 2016 totaled almost CNY2,9 billion (USD420 million), data from China’s ministry of finance shows.

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There could also be new changes in anti-tax evasion regulations, Liu suggested, saying China signed tax treaties with some countries in recent years, and there had been changes in international anti-tax avoidance policies, and these may be reflected in the amended corporate income tax law.

The corporate income tax law was approved by the NPC in March 2007, and went into effect on Jan. 1, 2008. The tax has been levied at 25 percent on enterprises that generate revenue in China, with lower rates offered for microbusinesses and high-tech companies.

 

There could also be new changes in anti-tax evasion regulations, Liu suggested, saying China signed tax treaties with some countries in recent years, and there had been changes in international anti-tax avoidance policies, and these may be reflected in the amended corporate income tax law.

The corporate income tax law was approved by the NPC in March 2007, and went into effect on Jan. 1, 2008. The tax has been levied at 25 percent on enterprises that generate revenue in China, with lower rates offered for microbusinesses and high-tech companies.

 

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