Explanation on the draft enterprise income tax law

2022-09-19
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Notes on the enterprise income tax law of the people's Republic of China (Draft)

notes on the enterprise income tax law of the people's Republic of China (Draft)

-- at the fifth session of the Tenth National People's Congress on March 8, 2007

Minister of Finance Jin Renqing

delegates:

I am entrusted by the State Council, The enterprise income tax law of the people's Republic of China (Draft) is now explained

in order to further improve the socialist market economic system, according to the spirit of the Third Plenary Session of the 16th CPC Central Committee on "unifying the tax system of all kinds of enterprises", and in combination with the new situation of China's economic and social development, the Ministry of finance, the State Administration of taxation and the Legislative Affairs Office of the State Council jointly drafted the enterprise income tax law of the people's Republic of China (Draft for comments), and in 2004, they solicited written consultations from the financial and Economic Commission of the National People's Congress, the legal working committee of the Standing Committee of the National People's Congress The pre Work Committee, the people's governments of all provinces, autonomous regions, municipalities directly under the central government and cities specifically designated in the state plan, as well as the relevant departments of the State Council, held symposiums attended by relevant departments, enterprises and experts, and directly listened to their opinions. In 2006, 32 central units were consulted again. It is generally believed that it is necessary to speed up the reform of the income tax system of domestic and foreign-funded enterprises (including Sino foreign joint ventures, Sino foreign cooperation, wholly foreign-owned enterprises and foreign enterprises, the same below) that pass the qualification examination of odor engineers at least every year, introduce and implement a unified enterprise income tax law as soon as possible, and create a fair tax environment for the competition of all kinds of enterprises. The enterprise income tax law of the people's Republic of China (Draft) (hereinafter referred to as the draft) has been formed on the basis of absorbing the opinions of all parties and further amending and improving it. After the draft was discussed and adopted at the executive meeting of the State Council, the State Council submitted it to the Standing Committee of the National People's Congress for deliberation on September 28, 2006. The 25th session of the Standing Committee of the Tenth National People's Congress deliberated on the draft. In January this year, the general office of the Standing Committee of the National People's Congress sent the draft to the deputies to the National People's Congress and organized them to study and discuss the draft in a planned way. Members of the Standing Committee and deputies to the National People's Congress generally believed that the time was ripe to formulate a unified enterprise income tax law, and the draft was basically feasible; At the same time, some modification suggestions are also put forward. According to the deliberation opinions of the members of the Standing Committee and the relevant special committees of the National People's Congress, as well as the opinions put forward by the deputies to the National People's Congress, the State Council made some amendments to the draft, forming the draft now submitted to the National People's Congress for deliberation. Now it is explained as follows:

I. the necessity and timing of legislation

China's current enterprise income tax is legislated separately for domestic and foreign-funded enterprises. Foreign funded enterprises apply the income tax law of the people's Republic of China for foreign invested enterprises and foreign enterprises (hereinafter referred to as the foreign capital tax law) adopted at the fourth session of the Seventh National People's Congress in 1991, The Provisional Regulations of the people's Republic of China on enterprise income tax (hereinafter referred to as the domestic capital tax law) issued by the State Council in 1993 shall apply to domestic enterprises. Since the implementation of reform and opening up in the late 1970s, in order to attract foreign capital and develop the economy, foreign-funded enterprises have adopted tax policies different from domestic funded enterprises. Practice has proved that this is necessary and has played an important role in reform and opening up, attracting foreign capital and promoting economic development. By the end of 2006, a total of 594000 foreign-funded enterprises had been approved nationwide, and the actual use of foreign capital was US $691.9 billion. In 2006, foreign-funded enterprises paid 795billion yuan in various taxes, accounting for 21.12% of the total national tax revenue

at present, great changes have taken place in China's economic and social situation, and the socialist market economic system has been initially established. After China's entry into the WTO, the domestic market is further opened to foreign investment, and domestic enterprises are gradually experimenting with the accuracy: <1n integrate into the world economic system, and face increasing competitive pressure. Continuing to adopt different tax policies for domestic and foreign-funded enterprises will inevitably put domestic enterprises in an unequal competitive position and affect the establishment of a unified, standardized and fair competition market environment

the current income tax system for domestic and foreign-funded enterprises has also exposed some problems in the implementation, which has not adapted to the requirements of the new situation:

first, the current domestic tax law and foreign capital tax law are quite different, resulting in uneven tax burden and uneven happiness among enterprises. The current tax law has some problems in terms of tax incentives, pre tax deductions and other policies, such as loosening for foreign-funded enterprises and tightening for domestic enterprises. According to the national enterprise income tax source survey data, the average actual tax burden of domestic enterprises is about 25%, the average actual tax burden of foreign-funded enterprises is 15%, and the domestic enterprises are nearly 10% higher than the foreign-funded enterprises. Enterprises have a high voice for unified tax treatment and fair competition

second, there are major loopholes in the current preferential policies for enterprise income tax, which distorts the business behavior of enterprises and causes the loss of national taxes. For example, some domestic enterprises take the "return investment" method of transferring funds to overseas and reinvesting in China, and enjoy the income tax preference of foreign-funded enterprises

third, the current domestic capital tax law and foreign capital tax law have been implemented for more than 10 years. Great changes have taken place in China's economic and social situation, which need to be improved and revised in time according to the new situation. Many important tax policies issued in departmental normative documents also need to be added to the law in a timely manner

in order to effectively solve the above problems in the enterprise income tax system in which thermosetting plastics (such as bakelite powder) and condensing plastics (such as epoxy resin + curing agent) are used as fillers, it is necessary to unify the income tax of domestic and foreign-funded enterprises as soon as possible. The reform of "merging the two laws" of enterprise income tax is conducive to promoting the optimization of China's economic structure and industrial upgrading, creating a fair competition tax legal environment for all kinds of enterprises, an institutional innovation to adapt to the new stage of the development of China's socialist market economy, a supporting measure to realize the "five overall plans" and promote the sustainable development strategy of economy and society, and China's economic system is moving towards maturity One of the landmark work of standardization is also the general consensus and voice of all sectors of society

at present, China's economy is in a period of rapid growth, the overall efficiency of enterprises has been greatly improved in recent years, and the fiscal revenue has maintained a good growth trend

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