To avoid a backlash by foreign investors, China's vice-minister of finance, Lou Jiwei, said China would not end its favorable tax treatment for foreign-funded companies before the second half of 2006 at the earliest, since any action on the issue could not occur before the next National People's Congress session in March 2006, and the required public notice would also add to the delay, the Financial Times reported. Lou said China still wants to equalize the income tax rates paid by foreign and domestic companies and at 24-25%, the unified rate is expected to be between the 33% rate paid by domestic firms and the 14-15% rate paid by foreign companies. After the new rate takes effect, foreign companies will enjoy a transition period of "five years or perhaps a longer period" before the new rates apply, Lou said.
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