Tax System Encourages Investment in China

June 1, 2012 Taxation in China

Tax System Encourages Investment in ChinaBEIJING – China is aiming to use tax policies to foster expansion of national businesses to overseas markets and to encourage greater international investment into the country.

China’s State Administration of Taxation (SAT) has released Opinions on the Construction of the Administrative System of International Taxation, outlining its intentions regarding taxation of earnings raised by foreign businesses operating in China and the tax treatment of Chinese enterprises investing overseas.

According to the report, the government will soon begin implementing new protocols and investigations methods to deter tax evasion in China by foreign registered entities. In the long term, the government will also investigate new means to improve Chinese tax authorities’ abilities to look into instances of tax evasion, and particular emphasis will be placed on ensuring that adequate procedures are implemented to stop tax evasion committed by non-residents investing into China.

As part of its effort to foster tax compliance and encourage the expansion of Chinese businesses, the SAT will dedicate greater efforts to assist domestic enterprises to enter the international market, and will actively help entrepreneurs to learn about the tax systems of the countries into which they plan to expand.

In order to further improve the conditions for Chinese businesses wishing to grow internationally, the SAT intends to continue researching and implementing policies to promote business development and expansion into foreign markets.

Alongside its efforts to encourage commercial development, the SAT also intends to create a more detailed databases of tax information about Chinese businesses expanding overseas, with comprehensive data on their foreign earnings and activities.

Photo by Robert Scoble