The Ministry of Finance (MoF) said it would consider raising mandatory profit pay-out ratios for state-owned enterprises (SOEs), the South China Morning Post reported. In a circular, the MoF said companies under direct central government control – which since 2008 have been required to pay a portion of after-tax profits to the central government under provisional rules – would be required to pay out a higher percentage of profits to help fund public spending and social security programs. Based on last year’s profits, SOEs are set to give Beijing US$6.16 billion in pay-outs this year under current rules. While higher pay-outs could help to boost social spending, analysts say they could hurt corporate expansion at SOEs.
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