BEIJING - Leaders of China's legislature have finished revisions of a law to end three decades of blanket tax breaks for foreign companies and are sending the measure to lawmakers for a final vote, a state news agency reported.
The presidium of the National People's Congress issued the decision Monday after expanding deductions for environmental conservation and charitable donations in the proposed law, the Xinhua News Agency said.
The measure, which is expected to be passed this week, would unify tax rates for foreign and Chinese companies, raising the tax burden for many foreign enterprises.
Tax breaks have helped to attract nearly $700 billion in investment over the last two decades that has fueled China's economic boom. But Chinese companies complain they are at a disadvantage because foreign-financed competitors pay lower taxes.
The new measure would set tax rates for most companies at 25 percent, with lower rates for high-technology development.
The plan would raise the total annual tax bill for foreign investors by about 43 billion yuan ($5.5 billion), Finance Minister Jin Renqing said last week. The government also would lose about 100 billion yuan ($12.5 billion) due to lower tax payments from Chinese companies, he said.
Under the current system, Chinese companies pay 33 percent of their profits in taxes. Foreign companies are exempt from taxes for their first two years in China, then get a 50 percent reduction for three years and later can get breaks that keep their tax rates as low as 10 percent.
"If the draft is passed, we will finally be able to stand on a level playing field with our foreign counterparts," said Chen Guofeng, an NPC deputy who is chairman of a textile company, was quoted as saying.
