Key Points:

  • State Council regulations effective 1 December 2010 provide that local governments may impose taxes for local services and education
  • New regulations appear to apply equally to China-based and foreign companies

According to a State Council announcement issued on 18 October 2010, starting from 1 December 2010 foreign enterprises shall be subject to city maintenance and construction taxes as well as taxes supporting education, all of which were previously levied only upon domestic enterprises. These measures to unify the taxation system are an attempt by China’s authorities to create a level playing field in terms of tax for all companies operating in the country. Currently, the rate for city and construction maintenance taxes is 7 percent at the municipal level, 5 percent at the county level and 1 percent at lower levels, and the rate for education-supporting taxes is 3 percent.