Beijing levies two new taxes on foreign firms

China’s State Council said it will begin charging foreign firms two additional taxes, marking the start of a standardized national tax treatment for domestic and international enterprises, state media reported. The new taxes – a construction tax and an education surcharge – will take effect Wednesday and are expected to raise foreign enterprises’ expenditure on local operations by up to 10%. In recent years China has gradually phased out preferential tax policies for international companies. The country unified the corporate income tax on domestic and foreign companies at 25% in 2007, though foreign firms had previously paid a 15% corporate income tax rate. In April, China also launched new FDI guidelines to encourage international investment in the services and high-tech sectors as well as in China’s central and western regions.