Shanghai plans free-trade zone tax incentive to encourage private equity

Shanghai's free-trade zone plans to roll out a tax incentive to encourage outbound investment by private equity funds.

Dai Haibo, an executive deputy director of the zone's administrative committee, said yesterday that the rule would be drawn up at the end of this year as part of the efforts to reinforce the mainland's go-global strategy.

"China's go-outbound move can't be achieved unless our rules are in line with international practices," he said. "The taxation policy is now being made and the national authorities are attaching great importance to it."

It would be the first preferential tax policy introduced in the zone, designed to be a Hong Kong-style free port and the first of its kind on the mainland, since its launch in late September.

Dai said funds registered in the zone would be treated as "offshore funds" and would receive special tax treatment.

"The tax system appears to be complicated and we will work out a series of solutions to help the funds when they make overseas investments," he added.