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China Phasing Out More FDI Tax Incentives (23.12.2010)
China’s policy of phasing out tax incentives previously available to foreign investors reaches its end game in the next few days as some of the last remaining specialist incentives come to a close. Foreign invested enterprises are considered as Chinese companies in law, however treatment of them in administrative areas often leaves them at a decided disadvantage when compared with Chinese owned domestic businesses. These include: Financial assistance during the economic downturn only being made available to Chinese owned businesses; Cheap loans and financing not being offered to foreign invested enterprises; Raising money via IPO’s being restricted to Chinese owned entities; An additional 10 percent dividends tax being required to repatriate profits overseas; Obscure licensing requirements effectively barring foreign invested enterprises from tenders and contract bids; Leniency towards Chinese owned businesses in matters of labor disputes and the payment of mandatory welfare; Lax financial controls and personal arrangements affecting audit and income tax payments.