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Sichuan Deputy: Tax Cut Good News for Chinese Companies
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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



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.


( by staff reporter Tang Fuchun, March 9, 2007)

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