Ultra-national treatment of foreign-owned enterprises does not affect the charm of China's big market

International Online Report: The State Council decided, starting from December 1, 2010, that is, today, China will unify the urban maintenance and construction of foreign-funded enterprises tax and education fee additional system, for foreign-funded companies, foreign enterprises and foreign individuals levy urban maintenance and construction tax and education fees attached. So far, the tax system of foreign-funded enterprises has been fully unified, and the "supranational treatment" enjoyed by foreign enterprises in tax policy has been completely terminated. What does this mean for China's investment market? Will it affect China's attractiveness to foreign investment?　　Today's broadcast of China International Broadcasting Corporation Global Information Broadcast Noon topic program will be wired to the relevant experts to discuss with you. We know that in the early period of reform and opening up, in order to attract foreign investment, China has implemented an important policy, domestic and foreign enterprises to implement a different tax system, and to give foreign-funded enterprises preferential treatment in the domestic enterprise tax. This "internal and external" tax system, to attract foreign investment and the introduction of foreign advanced technology has played an important role. However, with the deepening of China's reform and opening up, this tax system is increasingly inconsistent with the demand for fair competition in market economy, the contradictions are increasingly prominent, the community calls for the unification of the tax system of foreign-funded enterprises more and more strong. Since 1994, the NPC and the State Council have embarked on a gradual unification of the tax system for foreign-funded enterprises.　　In our current tax system, value added tax, consumption tax, business tax, Enterprise income tax, urban land use tax, travel tax, farmland occupation tax and real estate tax have been unified, and the system of urban maintenance and construction tax and education fee attaching is still different. Foreign capital generally in China's urban development and not in the remote rural host: From now on, the two tax concessions for foreign-funded enterprises, but also to draw a full stop, which means that, since then, foreign-funded enterprises and domestic companies to stand in the same market starting line, the fair competition. So, from today onwards, foreign-funded enterprises to pay more of these two taxes, what is the specific tax? What are the specific reasons for levying these two taxes? Why should China completely abolish the supranational treatment of foreign-funded enterprises? Wait, let's connect the executive director of China's WTO Research institute he Weiwen. Professor Ho, could you please introduce to us the specific reasons for the imposition of urban maintenance and construction tax and education fees for foreign-funded enterprises?　　Why do they have to pay these two taxes? He weiwen: First, the development of foreign capital in China, generally in the city, not in the remote rural areas, because the city out of the enterprise development needs of the facilities, there are many public facilities, but also to the labor force to solve the housing, medical, school and other urban construction costs, foreign capital must bear part of this, there is no doubt.　　Second, the external in China must hire people, so the labor is very important, the labor force is more and more need to have a lot of education conditions, a good education, so education must also invest, so the whole education foreign capital out part of the money is reasonable. The use of foreign capital to provide supranational treatment is necessary for the national situation Moderator: We know that China's domestic and foreign enterprisesIndustry to implement a unified tax system, also after a period of time, then why should the total abolition of foreign-funded enterprises in the supranational treatment? He Weiwen: WTO rules require that in the same market, no matter what enterprises, under the same conditions, must implement the same, equal, fair treatment, if the Chinese enterprises to pay 25%, and foreign enterprises in China tax 15%, their costs are not the same, competitiveness is not the same, which constitutes an unfair competition,　　So in the early days of using foreign capital, in order to develop its own economy and introduce technology, some supranational treatment and more favourable conditions are provided to foreign capital, which is done by many developing countries, but to a certain extent, it is necessary to move closer to the WTO rules, that is, to treat them according to the principle of fair competition and non-discrimination. Tax unification of foreign-funded enterprises does not affect China's big market charm Moderator: We note that more than a year, some international public opinion has repeatedly criticized China's unification of foreign-funded enterprises tax system, questioning China's "national treatment" led to the deterioration of foreign investment environment.　　So, does the tax unification of the foreign-funded enterprises affect the attractiveness of the Chinese market to foreign investment? He weiwen: I think the criteria for attracting foreign investment or investing in the environment are mainly not taxes, but the whole environment, an open, fair and transparent competitive environment, such as the American Chamber of Commerce in China, the Chinese American Chamber of Commerce, which represents U.S. investment in China, the 2010 white Paper on their membership in China, What are the top five challenges for companies operating in China, summed up without a tax, in fact, foreign investment in China is profitable, according to the Chinese Chamber of Commerce survey, their members in China in 2009, or equivalent, not less than its global average profit margin, such enterprises accounted for three-fourths, Two weeks ago, I just attended a Wal-Mart global board in Beijing, which was held in China for the first time in years, which shows that it attaches great importance to China and the president is here. GM is now in China, the first nine months of production is already 1.77 million vehicles, more than the U.S. domestic production, so the Chinese market is really bullish, so the big trend will not change.　　This 1-October, we actually use foreign capital 82 billion, year-on-year growth of 15.72%, now foreign businessmen, especially multinational companies, the main requirements of China's investment environment is not tax, tax fairness, both inside and outside the United States, this is the case in Europe. Moderator: Good, thank he weiwen. We see some foreign-funded enterprises also frankly accepted the end of supranational treatment, and that China is the world's most attractive market, will not be withdrawn from the capital.　　Below, we pass a short film, to understand, some foreign-funded enterprises to abolish tax preferences and continue to invest in China's views. Qingdao Priority Sharp Tools Co., Ltd. is a Korean-owned enterprises, the main production cutting tools, products are sold to more than 70 countries in the world. Liang Yuanjun, general manager of the company, said that the process of China's evolution into an industrial powerhouse was bound to attract more competition, which made it difficult for some foreign companies to operate, butThis does not mean that the investment climate in China is deteriorating. It's a good thing that foreign companies can get more concessions in China, but it can't be long. They had already thought of this and prepared ahead of time, so it was not surprising to abolish the tax concession. Liang Yuanjun said that only with Chinese companies to compete with Taiwan, can the strong stronger, in the international win more competitiveness. Russian Partner Logistics group executive manager Andre also said that although they do not want to see China's unification of foreign capital tax rate, but this approach is understandable, only this does not mean that China's investment environment deteriorated, but more competitive.　　After all, a country according to its own development of policy adjustment is its own right. Capital Bank (China) Co., Ltd., a Philippine company in China, is the only foreign bank that is headquartered in Jiangsu, China's corporate bank. Zhang Jinchen, the company's president, said that instead of withdrawing capital, they continued to expand their operations in China. Because China's small and medium-sized enterprises too need a lot of money to support, this is a broad market, but also their main customer base.　　Now they are based in Jiangsu Province, radiation Yangtze River delta, the most active region, focusing on serving China's small and medium-sized enterprises, has planned 3-5 years in China to build 15 branch outlets, and has a plan for the development of western China. Moderator: It seems that the charm of China's big market does not lie in the implementation of "supranational treatment" for foreign companies. China's tax on domestic and foreign enterprises alike, in line with the rules of the World Trade Organization, is the fair principle of the market respect, and a more fair and transparent market environment, will be more conducive to the development of enterprises in China.