Foreign, Chinese firms’ tax burdens unified

%3CP%3E%3CFONT%20face%3DVerdana%3EChina%20is%20levying%20two%20taxes%20on%20foreign%20companies%2C%20marking%20the%20beginning%20of%20a%20standard%20national%20tax%20treatment%20for%20foreign%20and%20Chinese%20enterprises.%3CBR%3EChina%20will%20charge%20foreign%20firms%20with%20operations%20here%20two%20additional%20taxes%20%28a%20construction%20tax%20and%20education%20surcharge%29%20in%20a%20measure%20taking%20effect%20Wednesday%2C%20according%20to%20a%20State%20Council%20announcement%20in%20late%20November.%3CBR%3EThe%20measure%20makes%20most%20of%20the%20taxes%20imposed%20on%20domestic%20and%20international%20companies%20equal.%20But%20it%20also%20means%20foreign%20enterprises%27%20expenditures%20on%20local%20operations%20will%20rise%20by%20up%20to%2010%20percent.%3CBR%3EAnalysts%20said%20the%20effect%20on%20foreign%20investors%20is%20limited%2C%20and%20they%20must%20adapt%20to%20the%20new%20situations%20in%20China%20and%20regard%20it%20as%20a%20market%20rather%20than%20just%20a%20low-cost%20production%20center.%3CBR%3E%22I%20don%27t%20think%20this%20will%20exert%20any%20negative%20effect%20on%20the%20growth%20of%20foreign%20direct%20investment%20%28FDI%29%20in%20China%2C%20given%20China%27s%20robust%20economic%20growth%20and%20increasing%20domestic%20consumption%2C%20which%20will%20steadily%20help%20the%20market%20maintain%20its%20appeal%20to%20foreign%20businesses%2C%22%20said%20Wang%20Zhile%2C%20director%20of%20the%20research%20center%20on%20multinationals%20under%20the%20Ministry%20of%20Commerce.%3CBR%3EDing%20Yifan%2C%20economist%20of%20the%20State%20Council%27s%20Development%20Research%20Center%2C%20agreed%20with%20Wang%20and%20said%20that%20in%20addition%20to%20tax%20policies%2C%20many%20other%20factors%20-%20including%20consumption-market%20size%2C%20labor%20resources%20and%20economic%20growth%20-%20could%20determine%20a%20nation%27s%20attraction%20as%20an%20investment%20destination.%3CBR%3E%22The%20measure%20itself%20will%20help%20to%20create%20a%20fair%20tax%20environment%20for%20companies%20at%20home%20and%20abroad%2C%22%20he%20said.%3CBR%3EEarly%20on%20in%20its%20reform%20and%20opening%20to%20foreign%20enterprise%2C%20China%20launched%20super-preferential%20tax%20policies%20for%20international%20companies%20in%20a%20bid%20to%20propel%20its%20economic%20growth%2C%20and%20the%20internationals%20were%20exempt%20from%20some%20taxes.%20Over%20the%20past%20few%20years%2C%20the%20preferential%20policies%20have%20gradually%20been%20phased%20out.%3CBR%3EAccording%20to%20the%20Ministry%20of%20Commerce%2C%20China%27s%20FDI%20grew%20from%20January%20to%20October%20by%2016%20percent%20from%20a%20year%20earlier%2C%20and%20October%20is%20the%2015th%20consecutive%20month%20that%20the%20FDI%20registered%20positive%20growth%20since%20the%20start%20of%20the%20financial%20crisis.%3CBR%3EThe%20European%20Chamber%20of%20Commerce%20in%20China%20said%20that%20foreign%20companies%20are%20gradually%20being%20treated%20the%20same%20as%20their%20local%20counterparts%2C%20sending%20a%20strong%20signal%20that%20China%27s%20investment%20environment%20and%20policies%20are%20maturing%2C%20and%20that%20European%20companies%20have%20been%20well%20prepared%20for%20the%20change.%20%22We%20have%20no%20reason%20to%20complain%20about%20the%20additional%20taxes%2C%22%20said%20a%20chamber%20staff%20who%20declined%20to%20be%20named.%3CBR%3E%22But%20we%20will%20be%20paying%20close%20attention%20to%20how%20China%20will%20continue%20opening%20to%20foreign%20businesses%20in%20the%20future%2C%22%20the%20person%20said.%3CBR%3EThe%20European%20Chamber%20of%20Commerce%20in%20China%20released%20a%20confidence%20survey%20in%20June%2C%20revealing%20that%2070%20percent%20of%20its%20member%20companies%20believe%20China%20will%20be%20among%20their%20top%20three%20investment%20destinations%20in%20five%20years.%3CBR%3EThe%20new%20tax%20measure%20comes%20after%20China%27s%20investment%20environment%20was%20widely%20criticized%20by%20foreign%20businesses%20in%20recent%20months.%20Their%20complaints%20partially%20led%20to%20China%20calling%20off%20super-preferential%20policies%20during%20the%20past%20few%20years.%3CBR%3EIn%202007%2C%20China%20unified%20the%20corporate%20income%20tax%20on%20domestic%20and%20foreign%20companies%20at%2025%20percent.%20Previously%2C%20foreign%20firms%20paid%20a%2015%20percent%20corporate%20income%20tax%20rate%2C%2018%20percentage%20points%20lower%20than%20their%20Chinese%20counterparts.%20The%20move%20was%20a%20turning%20point%20in%20the%20super-preferential%20policies%20that%20internationals%20enjoyed%20for%20about%20two%20decades.%3CBR%3EIn%20April%2C%20China%20launched%20a%20new%20FDI%20guideline%20in%20which%20the%20government%20encourages%20foreign%20companies%20to%20invest%20in%20the%20service%20and%20high-tech%20sectors%20instead%20of%20manufacturing%2C%20and%20to%20invest%20in%20China%27s%20central%20and%20western%20regions.%3CBR%3E%22It%27s%20understandable%20that%20they%20need%20time%20to%20adapt%20to%20the%20chan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