economy - Preferential tax regime expected to end

On Monday China's legislators are expected the twenty year tax honey moon for foreign investors, writes the International Herald Tribune.

"Companies are largely profitable, in it for the long term here and willing to put up with a change in the tax system that is more clear and more fair," said Robert Poole, vice president of the U.S.-China Business Council, which represents 250 American companies.
Until now, new foreign investors have been exempt from income tax for two years and got a 50 percent cut for another three. After that, other breaks such as for investing in special economic zones could keep taxes as low as 10 percent.
By contrast, Chinese companies pay 33 percent of their profits in taxes.

The ending of the preferential tax treatment has been on the political agenda as long as they are in place. The reason this measure could not be reversed was not because foreign companies were having so much power. After the introduction of the preferential treatment many Chinese companies moved their headquarters to Hong Kong so they would technically also qualify as a foreign company. They have been working against the abolishment as hard as the foreign companies.