Foreign companies face tax rise

Finance minister Xiang Huaicheng has said that tax rates for foreign-invested and domestic enterprises in China will be unified next year, the Financial Times reported. However, officials have said that tax concessions agreed before the unification would not be affected. The policy shift, which the minister said was necessary to fund social welfare costs, would mean an increase in tax rates for foreign companies that currently enjoy a 15 per cent rate in the five special economic zones and 49 statelevel development zones, compared with 33 per cent for domestic companies.

The unified rate has not yet been decided. Last year, government thinking appeared to favour a 25 per cent unified rate, but arguments for applying the 33 per cent rate to all companies have since strengthened.