China urged to act to minimise impact of global minimum tax rules, seen as ‘first step in the Long March’
- In July, 130 countries backed plans led by the Organisation for Economic Cooperation and Development to set a minimum corporate tax rate of at least 15 per cent
- Liao Tizhong, former director general of the State Administration of Taxation’s International Taxation Department, has urged China to conduct research
China should conduct targeted research and propose fiscal and taxation plans in response to new global rules to set a minimum corporate tax, according to a former taxation official.
Beijing needs to act to minimise the negative impact on the investment environment of foreign businesses in China and defend the country’s taxation rights and interests, said Liao Tizhong, former director general of the State Administration of Taxation’s International Taxation Department.
The overhaul is aimed at curtailing tax avoidance by making global enterprises, with implementation targeted for 2023.
The 20 per cent is revolutionary and progressive and is “the first step in the Long March,” Liao wrote, adding that the rate could later be raised to 40 per cent and even 50 per cent.
For the international community, it marks “an important step towards fairness in the international tax system” and is likely to lead to progress in politics, economy, law, governance, and technology, he said.
China has a basic corporate tax rate of 25 per cent for most companies, but reductions for sectors like hi-tech and for investment in research and development mean the rate could be lowered to below 15 per cent.