BUSINESSMEN in China may be in for a belated tax windfall if new rules allowing them to claim refunds on taxes paid on last year's inventory are introduced.
The State Administration of Taxation has proposed that companies be able to claim back taxes paid last year at 10 per cent of the purchasing price of agricultural products and 14 per cent for other products.
The proposal is designed to offset the problem of double taxation which would result under the new taxation system announced this month by Beijing. Under the system, this year's sales of inventory, taxed last year under the old system, would be subject to a series of new taxes.
Although businessmen welcome the idea of tax refunds, accountants were concerned companies could have to wait a long time before receiving refunds, causing them to pass on increased tax payments to consumers and putting pressure on inflation.
The new tax policy, which went into effect on January 1, will increase tax rates across the board and could result in businesses being double taxed on their inventory if refunds are not introduced.
Under the refund proposal, the administration has stressed local authorities should adopt a unified system for handling claims for tax refunds. However, details of the system have not been formulated yet.