Research On Influence Of New Income Tax Law On The Foreign Direct Investment In China

In order to meet the requirement of Open Reform, our country has made legislation and formed two income tax systems fitting for homeland capital and foreign capital enterprise respectively according to the different sources and characteristic of funds. There are great differences on tax preferences,Pre-tax deduction standards,tax rate in homeland capital and foreign capital enterprise under two income tax systems in use. Foreign capital enterprise enjoys more than homeland treatment from it. This mode is also a popular choice for many developing countries when they are using foreign capital. However, together with the economic development of our country and the continuously improvement of market economic, the disadvantages of old enterprise tax system are being shown gradually, which is not favorable for implementing a fair tax burden and the principal of equal competition as well as the optimization of our national economic structure. After the tax reform in 1994, the voice demands the unification of the tax laws never stopped, even much louder and louder. After such a long difficult journey for more than ten years, the new income tax law finally comes to implementation On November 28th 2007, from the date January 1st 2008 on, the old income tax law of the People's Republic of China which existed for more than ten years ended. It means that the taxation discrimination between domestic and foreign-funded enterprises will be dissolved. According to the new income tax law, the same standard will be used. And the new income tax law brings a heated discussion on influence the law will cause. Then what influence will the law bring about on the china foreign direct investment? Will it have some effects on the problem we call "fake foreign capital"? After the unification of the tax laws, how can we maintain the continuity and the stability of our foreign tax policies? All of these problems are the ones I would like to try to answer.