A Study Of Reform Of Corporate Income Tax In China

The reform of corporate income tax is in the process. In order to adapt to the requirement of international tax competition under the background of globalization, the motivation of the new round of reform should aim at protecting the benefits of the enterprises, and improving their competitiveness. Meanwhile, corporate income tax influences enterprises in many ways, and it is defined as one of outside governance mechanism in the framework of corporate governance. Therefore, based on the theory of corporate governance, the thesis researches the reform of corporate income tax from a specific prospective.The new bill of corporate income tax has enacted in March 2007, and its prescription on the elements such as the taxpayer, tax preference will create better institution background for the corporate governance of China's enterprises. But the relevant detailed rules of implementation have yet to be formulated, which will take long time and be modified again and again. Based on the principle argument that the corporate income tax acts as one of outside corporate governance mechanism, the writer remind the constitutor of not neglecting the impacts that the taxation will engender, moreover, the corporate income tax can be designed to improve the corporate governance.The thesis consists of seven chapters, which analysis the reform of corporate income tax from the prospective of corporate governance, encircling the impact of corporate income tax on the corporate governance:The first chapter introduces the background and meanings of the subject, the research scope, and the framework of the thesis. In addition, the innovation and shortages are pointed out.The literature review composes of the second chapter, which includes four fields that are the traditional research on the corporate income tax reform, the research on corporate governance, the research of corporate income tax from the prospective of corporate governance and the research of influence of globalization. As followings, the research design of the work is introduced.Chapter Three is the part of theoretical analysis on the relationship between corporate income tax and corporate governance. This chapter orients the corporate income tax as one outside governance mechanism and introduces the ways that the tax adjusts the corporate behaviors and that corporate tax relates to other governance mechanisms. In addition, it probes into three subjects which corporate income tax impacts on the governance, which are the capital structure, the mergers and the information enclosure respectively.The followings analyze China's current corporate income tax from the prospective of corporate governance in the forth chapter. After the analyze of the impact the current corporate income tax induces on the financial decisions, merger and acquisition, and the disclosure of information, the thesis points out the current tax which was designed mainly from the fiscal consideration is destined to bring side effects to corporate governance. In view of the availability of the data and information, the sample only comes from the listed companies in China.Chapter Five briefs the latest reform of corporate income tax that is the uniform of domestic and foreign corporate income taxation. It points out, under the background of the economic globalization; the super-nationalization toward the foreign enterprises has not been the preferred strategy for China in the international tax competition. The design of the corporate income tax should evolve into the phrase which aims at providing good political and institutional environment. In this way, the corporate income tax should be equitable for all enterprises.Chapter Six puts forward suggestion that in order to improve the competitiveness of China's enterprises the stipulation of detailed rules of corporate income tax can be set from the prospective of corporate governance. First, it analyses the positive effects the new bill is going to bring out. Then, the thesis suggests several improvements the constitutor can make including measures to boost capital structure, the merger and acquisitions and the quality of the information disclosure.The last chapter is composed of the conclusions of the thesis and points out the direction for further study.