Impacts of a Unified Enterprise Income Tax System on the Domestic Enterprises and Foreign Invested Enterprises upon the Effort to Lure Foreign Investment in China

摘要

With the gradual integration of the domestic market with the international market following China's WTO accession, one of the strategic issues to be settled is how to provide a level playing field for domestic enterprises, foreign invested enterprises and foreign enterprises that compete against each other. It is also against WTO rules to grant special treatment to foreign investors. Thus, unification of the two sets of enterprise income tax is the fundamental direction of the new tax reform. Discussions about this pressing issue focus on the impacts of unification of the two sets of tax upon the efforts to lure foreign investment in China. The objective of the paper is to probe into the background for a "uniform income tax" and its adverse and favorable impacts upon foreign capital inflow as well as the recommended policies for the forthcoming tax reform.