City to levy same taxes to foreign and domestic companies

City to levy same taxes to foreign and domestic companiesStarting December 1, Shenzhen will levy the same urban maintenance, educational surtax and construction tax to all domestic and foreign companies and all foreign individuals as ordered by the city taxation bureau. Urban maintenance tax will also be raised from the current one percent up to seven percent.

Last week the government said it will abolish favoritism to any companies having foreign investment. Expert regard this move as a clear sign of policy switch in regards with foreign investment, but the change will not cause any serious impact on foreign investors. Privileges have been given to companies having foreign capital during the early stages of China reform. However companies supported by any foreign capital will no longer enjoy favorable tax policies unlike domestic companies.

Economists said that the abolishment of the policy was inevitable since the government is focusing more on quality of foreign investment rather than quantity. 90 percent of U.S. companies felt the business environment had become more unfriendly, though their profits in China were above the global average.

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