China is to maintain preferential tax rates for foreign companies until at least 2007, Xie Xuren, head of the State Administration of Taxation announced in Beijing. The decision gives foreign companies more time to prepare for equal treatment with domestic competitors. In general foreign companies are subject to an average 15% tax rate, less than half of the 33% paid by Chinese companies. The government had pledged to equalize tax treatment for foreign and domestic companies when it joined the WTO in 2001. Overseas investors have urged the government to hold off any changes to a system that in their view helped to make China the world's largest recipient of foreign direct investment. According to Chinese media, a group of 54 foreign companies including General Electric, BP and Siemens have lobbied Beijing to postpone the ending of foreign tax benefits, asking for a 5-10 year transition period before they are taxed at the same rate as Chinese companies.
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