China approves law ending blanket tax breaks for foreign investors

BEIJING (AP) - China's legislature approved a law Friday to end three decades of blanket tax breaks for foreign investors, raising their tax rates to match those of Chinese companies. The law would set tax rates for most companies at 25 per cent of their profits. Until now, Chinese companies have paid 33 per cent, while foreign investors received tax breaks that kept their rates as low as 10 per cent.

The new measure was approved by the National People's Congress on the final day of its annual session. The vote was 2,826 in favour, with 37 opposed and 22 abstentions.

China's tax breaks helped to attract nearly US$700 billion in investment that fuelled the country's rise to become the world's fourth-largest economy. But Chinese companies complained they were treated unequally in comparison to foreign competitors.

© The Canadian Press, 2007