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1.Market Observations, 8.Was Sticky

2 Jan 2018 (AFR) – China offers tax break for foreign investment in key sectors

(2 January 2018, AFR, p10, by SUI-LEE WEE)

‘China said Thursday that it would temporarily exempt foreign companies from paying tax on their earnings, a bid to keep U.S. businesses from taking their profits out of China following Washington’s overhaul of the U.S. tax code.‘ <snipped…>

‘Despite its appeal as a manufacturing hub, one where companies from around the world have set up operations to tap into a highly skilled workforce and strong infrastructure, China charges high taxes. On top of a standard corporate rate of 25 percent, companies are required to make social security contributions and other payments that push their tax burden higher than it is in many other countries. The newly approved tax incentives in the United States could appeal to companies that are frustrated by China’s rising labor costs, ambitious local competitors and tangled legal systems, or those that would rather spend their money at home or elsewhere. And officials in Beijing have worried that the overhaul could prove to be a challenge to Chinese laws that aim to keep money from leaving the country’s borders.’

Read more at AFR.com (might need AFR login access, or try: AFR.com /trial)

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