China’s legislature said it will enact laws to protect private property and close a tax gap between local and foreign companies, possibly encouraging overseas funds to invest in the world’s fourth-largest economy.
Lawmakers will unify China’s income tax rate at 25%, cutting the rate on local companies’ from 33% and raising it from 15% on overseas firms, legislature spokesman Jiang Enzhu said at a press conference yesterday in Beijing.
“It is important that we protect the assets of those people, who through hard work, acquire property legally” he said before the legislature’s annual meeting in China’s capital. “It’s no longer consistent for us to charge foreign and domestic companies different tax rates.”
The property law, China’s first since the Communist Party took power in 1949, enforces a 2004 constitutional amendment that lets individuals own property. The government is strengthening laws to protect investments and open more options for the country’s 33.5 trillion yuan (US$4.3trillion) in deposits and US$1-trillion in foreign currency reserves.
In passing the property law, which lets people own and sell assets such as land-use rights for as long as 70 years, the legislature is ignoring criticisms by people who say it threatens government assets.
Li Chengrui, a former head of China’s statistics bureau, attacked the proposed law as legalizing the misappropriation of state assets and endorsing a widening wealth gap, Hong Kong’s Ming Pao Daily reported yesterday.
