The Instability of Chinese Tax Structure and the Guidelines for the Investors in China
Asian Tax Journal Vol. 7 No. 1 (2006), pp. 117-139
Abstract
Han, Sang-Kook*Kook, Joong-Ho**The category of turnover taxes and income taxes, that are major tax items in China, are very unstable. And recently Chinese government makes extra efforts to efficiently manage tax collection. Because the tax system is a very important factor for business, investors in China have to pay a special attention to the instability of Chinese tax system. We suggest the investors to1. Be prepared for future tax reforms.2. Be prepared for the strict application of transfer pricing, related with income tax on enterprises and joint stock enterprises.3. Be alert on the changes in preferential treatments in taxation.4. Beware of the adjustment of the refund rate of value added taxes.5. Use the partial refund of VAT to open up domestic market6. Use the other strategic methods rather than low-cost strategy to cope with the instability of VAT refund.
Keywords
- tax instability
- vat
- income tax on enterprises with foreign investment and foreign enterprises
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