Government officials have confirmed that China will phase out the preferential tax treatment granted to foreign companies in special economic zones, the Financial Times said.
The move follows China's accession to the World Trade Organisation and is an application of the principle of creating a level playing field for domestic and foreign companies. Officials are still discussing the new unified rate of tax to be charged, with one group favouring 25 per cent rate while another prefers 33 per cent, the rate currently levied on domestic firms. No decision has yet been taken on how long the phasing-out process will take – one official said that making local rules conform to national laws would be a complex and drawn-out task.