China considering charging same taxes to domestic, overseas firms

China considering charging same taxes to domestic, overseas firms

The Chinese government is planning to draft a law which would impose a 25 percent income tax on both domestic and foreign firms.

With this, the country would remove the preferential treatment given to foreign firms in the country.

The Chinese news agency reported that the taxation bill was unveiled to the Standing Committee of the National People’s Congress.

As of now, the domestic companies are taxed at a rate of 24 percent on average. The foreign firms in comparison are taxed at 14 percent. This has been a controversial topic in the country.

Finance Minister Jin Renqing added in a statement that implementation of this law would foster fair competition among all businesses operating in the country. They had adopted a two-tier tax system many years ago to invite foreign companies to invest in the country.

Ever since China joined the World Trade Organization in 2001, these differential taxes were hurting the domestic companies.