China Ends Tax Breaks for Foreign Companies
Jun 20th, 2007 by Yue
Over the last twenty years, the Chinese government has effectively attracted foreign investment by setting up special economic zones in key cities. Foreign companies that invested in these economic zones got some nice tax breaks. They didn’t have to pay income tax for first 2 years and therafter were taxed at 15%. In comparison, Chinese companies are taxed at 30% and higher.
However, this nice tax break ended in March 2007. Now both foreign and domestic companies pay the same tax rate, 25%. This finally creates an equal playing field for domestic companies, allowing them to compete more effectively on their home turf. It will be interesting to see what differences this makes over the next few years.
