Last year, Chinese legislators enacted a new corporate income tax, effective January 1, 2008. Just before the close of 2007, the state Council approved regulations regarding its implementation. A number of circulars, attempting to further clarify the law and regulations, have issued since the law has become effective. Compared with American tax law, it’s Chinese counterpart isn’t nearly as voluminous. That doesn’t make the job of the accountant or attorney any less difficult because the law itself is, typically, rather a lot less specific and its implementation often haphazard.
The goal of tax equalization — which Chinese regulators have promised since the 1980s — between domestic and foreign corporate taxpayers will, in principle, vanish at a rate of 25%. That said, certain firms may transition to that rate over the course of several years. In addition, the law exempts certain industries — agriculture, forestry, for example. — and provides a variety of incentives, including a 15% tax on certain high-technology companies. Some of the tax concepts introduced by the corporate income tax law are new to the Chinese environment — giving one pause as to how they might be handled by administrators. The new law also deals with transfer pricing, a withholding tax on dividends and a thin capitalization rule, which may tend to work against overseas investors.
The main difficulty, as with all Chinese law, is its generality, leading to a good deal of confusion as to the law’s implementation and application to one specific situation.
Strafford Publications has announced the following online audio seminar to be presented on Thursday, August 7, 2008 at 1:00–2:40pm Eastern:
China’s New Business Income Tax
Shielding Non-China Income From the Expansive Enterprise Income Tax
Plus: The Impact of IRS Contract Manufacturing Regs for U.S. Operations in China
A Live 100-Minute CPE & CLE Teleconference with Interactive Q&A
Peng Tao, Of Counsel, DLA Piper, New York.
Melanie Chen, Managing Director of China Group, UHY Advisors, New York
Alan Granwell, Partner, DLA Piper, Washington, D.C.
For more information and to sign up for what promises to be a seminar of great interest to corporate management, their attorneys and accountants, click this link.
The Event: China’s Corporate Income Tax — Online Seminar by AsiaBizBlog, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.