Concession will soften blow of reforms for most HK firms, says finance minister
China's proposed corporate income tax law includes a major tax break for small businesses, Finance Minister Jin Renqing revealed yesterday.
The move, seen as a sign of Beijing's support for the private sector, would benefit many Hong Kong-invested ventures on the mainland.
The corporate income tax bill seeks to unify the tax rate for domestic and overseas firms at 25 per cent. If passed, it will end a decades-old practice, aimed at attracting foreign investment, that makes domestic firms pay 33 per cent income tax while their foreign counterparts pay an average of only 15 per cent.
But Mr Jin said a preferential rate of 20 per cent, to be phased in over five years, had been included for 'small and low-profit-margin' enterprises, a category that covered most Hong Kong- invested ventures on the mainland.
'To small enterprises, including Hong Kong, Macau and Taiwan companies, [the unified tax regime] would not be a big burden to their financial costs,' he told a media briefing yesterday.
Most small firms from the three regions now pay the overseas rate of 15 per cent. But under the new tax law, instead of paying the unified rate of 25 per cent, the tax rate for small firms would rise by 1 percentage point a year from next year until it reached 20 per cent.
