The draft Corporate Income Tax Law is now under discussion at
the ongoing NPC session, and will be presented for
voting on March 16, 2007. A provision of particular interest
stipulates the unification or standardization of the rate of
taxation at 25 percent, applicable to both domestic and foreign
companies. In our special series on the Corporate Income Tax Law,
we'll be interviewing NPC deputies, entrepreneurs, industry
leaders, and scholars for their take on the proposed unified tax
rate, its significance, and potential impact on China's industry
and economy. The following is our second interview with Yang Ming,
a member of the China Democratic National Construction Association.
The third interview with a Hong Kong deputy, Lau Pui-king,
comes tomorrow. – Editor.
The ongoing National People's Congress (NPC) session in Beijing runs from March 5 to
16. During this time, more than 2,900 deputies from 35 delegations from around the country will
examine and approve work reports of the Central Government, the NPC
Standing Committee, the Supreme People's Court and the Supreme
People's Procuratorate, and the central budget and national
economic and social development plan.
One of the tasks on this packed agenda is to discuss the
long-awaited Corporate Income Tax Law, which, among other things,
sets a unified rate of 25 percent.
"I'm very glad to see that the draft law has been submitted to
this session for discussion and approval," Yang Min, a deputy with
the Sichuan Delegation, told china.org.cn.
Ms. Yang submitted a proposal at last year's NPC session, urging
for a standardization of income tax of domestic and foreign-funded
enterprises at an early date. Her proposed tax rate was 24 percent.
Prior to her proposal, more than 500 NPC deputies had also brought
forward a total of 16 similar bills and many suggestions since
2004.
In 2002, Yang conducted an investigation on social security in
Ziyang City, Sichuan Province, and found that many local
enterprises were defaulting on social security payments for their
employees. As she continued with her research, she started
receiving complaints from local entrepreneurs about heavy financial
burdens, including taxes, fees and other expenditures, which were
part of the reason why they had defaulted on employee social
security payments.
As a member of the China Democratic National Construction
Association, one of China's nine non-Communist parties, Yang also
sought opinions from her party members, the majority of whom are
industry leaders.
"A lower tax rate or tax breaks for foreign-funded enterprises
might have been reasonable in the 1980s since it was a good way to
attract foreign investment. But I think we should now give more
support to Chinese enterprises or at least guarantee an equal tax
policy."
Although the proposed 25 percent standard is slightly off the
mark of her suggested 24 percent, she takes satisfaction in the
fact that a change is being made.
"It is in itself an improvement and the goal of achieving a tax
cut has been achieved."
Click here to read our first interview.
(China.org.cn by staff reporter Tang Fuchun, March 9, 2007)
