Advertisement
Advertisement
Sinopec
Get more with myNEWS
A personalised news feed of stories that matter to you
Learn more

H-share pioneers risk paying back-taxes

Sinopec
Nevin Nie

The first batch of nine mainland firms that listed H shares in Hong Kong are facing billions of yuan in back-tax payments as the special rate on their income tax had been scrapped years ago, according to Shanghai Securities News.

Those firms, including Maanshan Iron & Steel and Tsingtao Brewery, were granted a special tax rate of 15 per cent instead of the normal 33 per cent by the State Council when they listed in 1993 as Beijing hoped to make their shares more attractive.

However, the special treatment had expired and it was unclear if the State Council had extended it, market watchers said. It also remained unclear when the special treatment expired and whether the companies needed to make up for the tax payment shortfalls, they said

The State Administration of Tax ordered local authorities to put an immediate halt to the favourable income tax policies, Shanghai Securities News said yesterday.

'Such preferential income tax policies have expired but are still in execution,' it said. 'The differences in income tax arising from the application of expired preferential income tax policies in previous years shall be dealt with [according to the tax law].'

Other companies that received the special rate included Dongfang Electrical Machinery, Sinopec Shanghai Petrochemical, Beiren Printing Machinery, Guangzhou Shipyard International, Sinopec Yizheng Chemical Fibre, Jiaoda Kunji High-Tech and Tianjin Capital Environment Protection.

Maanshan Iron paid 422 million yuan in income tax last year on pre-tax profit of 2.76 billion yuan and a 33 per cent tax rate would mean about 900 million yuan.

Dongfang Electrical's pre-tax profit was 958.9 million yuan last year and the company paid 94.2 million yuan in income tax.

Maanshan Iron, Shanghai Petrochemical, Dongfang Electrical and Beiren Printing issued announcements last night saying they were talking with the tax authorities.

Tianjin Capital said it had been paying the 33 per cent tax rate since 2001 after it acquired new businesses.

Post