China: round-tripping
318949-1121421890573/cqu07en.pdf> End December, the government submitted to the National People’s = Congress’ standing committee a draft new corporate tax law = containing one unified tax rate for domestic and foreign funded = enterprises (FFEs) and uniform treatment of tax deductibles and tax = base. The new unified rate of 25 percent would imply a significant = increase for FFEs operating in special economic zones, which now = pay 15 percent (other FFEs now pay 24 percent). The new rate will = be a decrease for domestic firm, which now pay a statutory rate of = 33 percent. The move is likely to make investment in domestic = enterprises=97which are in general more oriented on the domestic = market=97more attractive. Also, it is likely to end the so-called = “round tripping” of domestic capital disguised as foreign, and thus = reduce measured FDI, although not genuine FDI. I wonder how much of those “foreign ownership” stats that Marvin = quoted reflect this sort of round-tripping. Doug