The annual meeting of the Chinese National People's Congress (NPC) approved a new Corporate Income Tax Law that equalizes corporate tax rates for both foreign and domestic companies. Under the previous corporate tax regime foreign companies enjoyed preferential rates, paying as little as 15 percent depending on where they operated in the country, compared with domestic companies who paid as much as 33 percent. Although the changes to the corporate tax regime will have a significant impact on China's investment environment going forward, they should not be viewed with too much alarm by existing or potential foreign investors. Firstly, the existing regime established almost three decades ago to attract foreign investment was viewed as being too one-sided and in need of reform. China's longer term economic and political stability is likely to benefit from the unified tax regime.
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