Foreign firms double-check their books as new tax policy begins

A new tax policy that went into effect Sunday promising greater scrutiny for foreign firms has the companies scrambling to check their tax planning to avoid being investigated for anti-avoidance measures, Reuters reported, citing tax lawyers and analysts. Chinese state media have said tax evasion and avoidance by foreign companies costs the country at least RMB30 billion (US$4.8 billion) in tax revenues each year. But China’s existing anti-tax avoidance rules remain loosely defined even after the concerned elaboration, giving tax authorities discretion on whether companies meet regulatory demands.