LevelingthePlayfieldofEnterpriseCompetitioninChina.pdfVIP

Leveling the Playfield of Enterprise Competition in China —The Review on China’s New Unified Enterprise Income Tax Law Liao Yixin Law School, Xiamen University, PRC Since early 1990s there have been coexisting two sets of enterprise income tax systems in the People’s Republic of China. One of the two sets of enterprise income tax systems is the so-called domestic invested enterprise income tax system which is in principle based on the Provisional Regulations of the People’s Republic of China on Enterprise Income Tax (PREIT) of the year 1993, the other is the foreign invested enterprise income tax system which is principally built by the Income Tax Law of the People’s Republic of China on the Enterprises with Foreign Investment and Foreign Enterprises (ITLEIFE) of the year 1991. On March 16 of this year, China’s parliament, the National People’s Congress, adopted the landmark law, the Enterprise Income Tax Law of the People’s Republic of China (EITL) at the closing ceremony of the 5th session and with an overwhelming majority of NPC lawmakers. This 60-article law, which is due to come into effect as of January 1st, 2008, is a key signal of a phase-in end of superior treatments to foreign investors for almost two decades and the unification of the two sets of income tax system mentioned above in China. This article discusses in detail four features of this new unified enterprise income tax law and highlights four controversial problems which deserve further clarification. I. the Four Reform Features of the EITL Compared with the two sets of income tax system, the content of provisions of the new unified enterprise inco