CHINA'S unification of domestic and foreign income tax rates should be accomplished within the next two years, a senior tax official says. State Administration of Taxation deputy director-general Xiang Huaicheng said Chinese enterprises were being taxed at 30 per cent, while foreign enterprises outside the special economic zones paid 33 per cent. It had not yet been decided whether to raise domestic taxes to 33 per cent or lower foreign taxes to 30 per cent, he said. He said that in either case, 'foreign enterprises will not suffer a higher burden after unification'. He said the administration would move to eliminate all tax exemptions and reductions offered by local governments in their bids to lure foreign investors so as to eventually create a nationwide unified tax rate. From now on foreign businesses should not place too much faith in promises from local governments to give them preferential tax breaks, he said. Any modification of national tax laws by provincial or local governments would be prohibited by the administration. If a local government chose to subsidise foreign enterprises out of its own revenue, that would be something the Ministry of Finance would have to investigate. The greatest regional disparity between tax rates exists in the coastal economic zones and government officials believe it could take as long as five years for the zones to be brought into line with the rest of the country. Mr Xiang, speaking at the annual Business Leaders Symposium, said the central government was not prepared to let inland provinces set up their own special economic zones to catch up with the coastal zones. Eighteen local governments have petitioned Beijing for permission to set up economic zones. Sun Shangqing, director of the State Council's Development Research Centre, said inland provinces should not adopt the same industrial and trade practices or the same economic policies as the coastal provinces. They should concentrate on improving living standards by their own means, he said. There would always be a difference between the western inland regions and the eastern coastal regions. 'These contradictions cannot be resolved,' he said. Mr Xiang said China would move away from the current itemised personal income tax system towards a more comprehensive internationally accepted system. The conditions should be right for such a system in the next two years, he said.