[CND, 05/26/02] The Chinese government was using new tax incentives to attract more companies to join the west region development, the Hong Kong iMail reported on Saturday, citing a circular issued by the State Administration of Taxation.
Under the old tax rules, companies would have to pay a 15 percent corporate tax if it had over 70 percent stake in the western region in certain sectors, including power generation, irrigation, post and telecommunications, broadcasting and television.
The new incentives will exempt both domestic and foreign firms from the central government's corporate tax in the first two years. In the following three years, foreign companies will pay at a lower tax rate of only 7.5 percent; and the domestic firms will also receive 50 percent cut.
The central government tax agency also encourages local governments to halve or exempt these companies' local tax. However, the regions must get advance approval from the State Administration of Taxation if the amount involved is over one million yuan or more.
The new tax policy covers investments in the western regions, which include half of Chongqing city, Sichuan, Guizhou, Yunnan, Qinghai, Shaanxi, Gansu, Tibet, Ningxia, Xinjiang, Guangxi and Inner Mongolia, and several minority autonomous prefectures in the provinces of Hunan, Hubei and Jilin. (LIU Weijun)