Tax Incentives For Foreign Trade Enterprises Have Been Cleared Up

As the overall economic growth slows down, the Chinese government is facing a downward trend in tax revenue. At the same time, how to deal with huge local debts is also a difficult problem. Some economists think this is a major threat to the financial system. According to the latest statistics, the total balance of local government debts is RMB 17 trillion and 900 billion yuan.

Foreign media reported that the purpose of the central government's move is to prevent local governments from adopting disorderly and harmful competition for attracting foreign investment. Chinese officials have asked local governments to report the clean-up of such preferential policies by the end of March. The State Council said that, without the approval of the State Council, no preferential taxation policy could be formulated by all regions in the future. This means that the enterprise must pay the enterprise income tax in full at 25% of the tax rate.

Foreign business organizations believe that the uncertainty of incentives will be the latest challenge faced by foreign-funded enterprises in China. Business organizations complain that China has used antitrust laws to suppress foreign companies, although China also says it has intensified its enforcement efforts against domestic enterprises. Foreign technology companies have questioned the new rules of China's banking industry, calling these measures require foreign technology companies to submit know-how.

At the two sessions of the National People's Congress, Lou Jiwei, Minister of finance, pointed out during the meeting with reporters that the work of comprehensively clearing and standardizing the preferential tax policies promulgated by local governments will be timely introduced according to the national development situation. In order to maintain the national unified market, eliminate administrative competition and create a fair market environment, we need to gradually clean up some local preferential tax policies for all legal persons in China.

In fact, as early as November 27, 2014, the State Council promulgated the notice on cleaning up and standardizing the preferential tax policies, and made arrangements for the development of the clean-up work. At the two sessions of the national conference, the topic of clearing local preferential tax policies has been mentioned again and again. It is evident that the implementation of this policy has always touched many people's hearts.

The International Financial Daily reporter learned from Xiao Taishou, a famous tax planning expert, that from the results of the national survey, local governments made some local tax policies arbitrarily, resulting in an unbalanced proportion of tax revenue among different regions. The snatching and competition of tax sources in various places was very intense, which was a hindrance to the allocation of resources and production factors of enterprises. Therefore, in order to establish a national unified market, promote the flow of production factors in the whole country, realize the decisive role of market economy in the allocation of resources, create a good social environment for ruling the country according to law, and clearing local preferential tax policies in the field of Taxation has become a pressing task and a pressing issue at present.

Xiao Taishou pointed out that the second reason for clearing local preferential tax policies is that the local governments have their own policies. Favoured policy If this practice is allowed to persist, it will easily lead to corruption in local governments. In order to promote the development of enterprises in a certain area, local governments may introduce a separate tax preference policy for this purpose. Under such circumstances, the use of government power is likely to cause corruption. Therefore, starting from this goal, in the context of transforming the government and improving the service function of the government, cleaning up the regional tax policy has become an important part of the local government's transformation of functions, and to some extent, it can also inhibit the occurrence of local government corruption.

In addition, Xiao Tai said that if every place has the power to make policies separately, it may lead to different tax policies faced by the same enterprises in two provinces. This is obviously unfair for enterprises to participate in the national market competition, nor is it conducive to the development of market economy. Therefore, clearing local preferential tax policies can create a fair competition legal environment for enterprises across the country, which is the requirement of the development of the times.

For a long time, local government By setting up attractive tax policies and other preferential measures to attract investment, a large number of enterprises have been gathered to develop the local economy. Various enterprises are also accustomed to enjoying the various conveniences brought about by it. Under such circumstances, the State Council issued a document calling for the clean-up of local preferential policies such as taxes and regulations, which undoubtedly put a huge stone into the long and silent water. Then, what kind of impact will the development of cleaning work bring to enterprises and regions?

Xiao Taishou believes that the impact of clean-up on enterprises can be made at a macro level. Local enterprises A fair tax environment with foreign enterprises, excluding local political barriers, is conducive to competition among enterprises across the country. "Therefore, in the long run, it will be good for enterprises." Because if we eliminate some local preferential tax policies, it means that enterprises will pay taxes in accordance with the state's tax law. The process is very clear, which can eliminate the intervention of local law enforcement departments and so on, which is conducive to the growth of enterprise vitality.

Of course, there may be some disadvantages to local enterprises. As local businesses can not continue to enjoy local preferential tax policies, it will increase the tax burden of local enterprises in a short time. As for the impact of clean-up on the region, it should be more specific. Xiao Taishou believes that in every place, each has its own preferential tax policies and places that are tightly bound. From the perspective of investment guidance, different policies will lead to the flow of production factors, which is conducive to attracting investment from local governments.

Finally, he emphasized the difficulty that may be faced in the work of cleaning up and standardizing the local preferential tax policies, that is, the coordination between the central government and all locality. Due to the particularity of the specific conditions in various regions, there may be some problems between local governments and the central authorities in the process of cleaning up. In this case, it is difficult for the local government to recognize the central policy. But if the local government does not recognize it, it will be difficult to carry out the clean-up work. Therefore, the process of cleaning up preferential tax policies is also a process of coordination between local governments and the central government.