Research On The Legislation And Reform On Enterprises Income Tax System Of China

Enterprise income tax (EIT), also called corporate income tax in other countries,is the main tax type and holds an important position in China's current taxationsystem. However our current Enterprise income tax is no longer fit for the presentsocial and economic development. The problems in the system bring serious troubleto the litigation concerning enterprise income tax. The biggest problem is that thereare two laws related with enterprise income tax according to different sources ofcorporate capital: Provisional Regulations of the People's Republic of China onEnterprise Income Tax, applicable for local enterprises, while Income Tax Law OfThe People's Republic Of China For Enterpriseswith Foreign Investment And ForeignEnterprises, applicable for foreign invested enterprises (FIEs). The big difference oftreatment between the two laws goes against the international practice, remains unfitfor the present economic development in China, and collides with principles of equityand efficiency in taxation. With the progress in our open policy, there has been great change in thesocial and economic environment compared with that of ten years ago, andinconsistence of the present EIT system with the outer environment becomes apparent,that is, it is no longer fit for economic development. Therefore, to innovate the presentEIT system becomes necessary, and it is of great significance to make researches onour EIT taxation innovation.This paper deals with EIT taxation and follows the progression of issue analysis,innovation guidelines, framework of innovated system and suggestion for makinglaws.The paper first analyses the present EIT taxation system and bring forward theprecondition: the current EIT system must be innovated to satisfy the needs of oureconomic development. Then, based on the analysis of present issues, the basicprinciples are abstracted for tax innovation to establish orientation of EIT innovation.The principles focus on reinforcing common principles and its consistence with outerenvironment. After that, the paper makes reference to the accepted ways of ruling inCIT taxation in other countries, devises, on the basis of the reality of our country, thebasic pattern for our EIT taxation innovation: a general framework of EIT based on atwo-rate system along with a classic system. The paper makes detailed analyses ofseveral important issues and makes out practical designs for the innovated system.