National Treatment is there: 3% Income Tax Imposed on FIEs in Sichuan Go back »

2006-09-07 | Southwest China

According to new regulation of Sichuan National Tax Bureau, Foreign Invested Enterprises (FIEs) in Sichuan will be imposed Company Income Tax (EIT) of 3% by local finance, in addition to the 30% EIT of national finance which many FIEs are exempted for the first two years of making profit and taxed with 50% reduction for the following three years.
 
Before January 1, 2006, the exemption of 3% EIT was one of the preferential policies of Sichuan Province in foreign investment promotion. It is now repealed according to decisions of Sichuan Provincial People’s Congress and Government. This change of policy makes unexpected difficulties to financial plan of FIEs, some even enormous.
 
A panel discussion has been held by the European Chamber on August 10. All participants agreed that this change of taxation policy will bring negative impact on the promotion of Sichuan Province to foreign investment.
 
Now the European Chamber is seeking for joint force of local foreign chambers and organizations for high-level conversation with Sichuan provincial authorities, striving for at least a transitional period for the FIEs invested before 2006.