Dotcoms face standard company treatment by authorities

PUBLISHED : Wednesday, 29 November, 2000, 12:00am
UPDATED : Wednesday, 29 November, 2000, 12:00am

The State Taxation Administration will apply the same tax principles to dotcom companies as it does to other firms in China.

Ernst & Young China partner Alfred Shum told the company's annual China seminar the tax treatment would be announced by the end of the year.

Under existing regulations, domestic companies pay corporate income tax of 33 per cent and 5 per cent of turnover as business tax.

Mr Shum said he had learned, in discussion with the authorities, that they could not think of better tax principles and so had decided to apply the same ones to dotcom companies.

Technically, if a Web site did not have a 'cn' suffix, it did not need to register in China, Mr Shum said. However, if the company had a server in China, that implied it was technically doing business there.

Mr Shum pointed out it was common for Internet companies to avoid taxation in a free-market economy, but it was difficult to do in China with its foreign currency controls.