The country's top legislature yesterday decided to submit the
draft property law and corporate income tax law for voting at the
next full session of the National People's Congress (NPC) in
March.
The decision, made at the 25th session of the NPC's 10th
Standing Committee, pushes the marathon legislative process of the
controversial property law to the last lap after seven readings. No
previous law has had more than five readings.
The property bill had its first reading in 2002 and was
withdrawn from the NPC full session in March amid worries the draft
might undermine the legal foundation of the socialist system public
ownership.
If passed in March, it will be the country's first law to
protect both public and private ownership.
Yao Hong, director of the civil law office under the NPC Law
Committee, refuted worries it would undermine China's socialist
market system, claiming the draft is in line with the country's
Constitution.
She said although the Constitution stipulates that public
ownership should be the leading force of the socialist market
economy, of which the private economy is a major component, it
doesn't indicate that the two ownerships should not be equally
protected.
"It's obviously unfair if compensation for State-owned property
is higher than that for private-owned," Yao said. "It would
seriously harm the public's interests."
After discussion, the committee agreed that the latest draft,
which emphasizes equal protection of State, collective and private
property, takes into consideration the concerns of all parties, and
decided to submit it to the NPC full session.
In contrast to the controversial property law, the corporate
income tax law, which aims to unify income tax rates for domestic
and foreign companies at 25 percent, faced little obstacle in
review.
It is the draft's first reading, but members considered it good
enough to be submitted to the next NPC full session. Usually, a
draft takes at least three reviews before being forwarded.
Legislators agreed that the tax rate is appropriate and the
revision should not be delayed as favorable tax policies for
overseas companies discriminate against local enterprises.
Companies in China currently pay income tax at a nominal rate of
33 percent. But because of various tax waivers and incentives,
foreign businesses actually pay about 15 percent while domestic
enterprises pay 24 percent on average.
Shi Yaobin, director of the tax policy department of the
Ministry of Finance, said the law would not result in a sharp
decrease in foreign investment, as a stable society, vast market
potential and low labour costs continue to be major attractions for
investors.
In addition, the draft offers foreign businesses a grace period
of five years, and says any favorable polices will apply to both
local and overseas companies equally.
If passed, the law is expected to take effect on January 1,
2008.
(China Daily December 30, 2006)