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WTO entry to prompt reforms
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Winton Dong
WITH China's looming entry to the WTO, some traditional policies in the country will soon have to be changed so as to keep in line with international practice. Reforms of taxation and customs policies may arouse the greatest concern among foreign-funded firms and foreign investors.
Lu Yun
vice-director, International Taxation Division of the State Administration of Taxation.
China's imminent WTO accession has placed new demands for further reform of the nation's taxation policies such as the most favoured nation treatment, national treatment, anti-dumping rules and others.
On the face of it, both domestic enterprises and foreign-funded firms are subject to the same income tax rate of 33 per cent. Nevertheless, actual taxes levied on these two categories of firms are greatly different because of the difference in assessment and tax reduction conditions.
Such a sharp discrepancy is not in accordance with international taxation practice. It also negatively influences concerned national finance, trade and industries after the country's accession to the WTO.
Meanwhile, taxation reform does not necessarily mean tax reduction or exemption. For those investors who enjoy too much tax preference in the countries they invest, their profits will be taxed a second time in their home countries.
Moreover, personal income, consumption, value-added and other tax policies in China will also be reformed to meet new challenges.
Zhou Guanshan
vice-director, International Co-operation Division, General Administration of Customs.
To meet international demands, China will gradually reduce the import duty of automobiles from more than 100 per cent to about 20 per cent in the coming five years.
Such a decisive move will embarrass the country's car producers. At present, the largest carmaker in China has an annual capacity of 200,000 units. However, Toyota, just one of Japan's main producers, can produce 10 million vehicles a year, or about five times of China's total annual production.
China has also promised to import 9 million tonnes of agricultural produce each year after its accession to the WTO, thus pushing domestic farmers to face a situation more competitive and arduous than before.
Much more than that, customs duties on chemical and mechanical products will also be sharply reduced.
Duties reduction will surely bring about temporary difficulties for the country's economic development: less revenue, more foreign exchange expenditure and other side effects.
On the other hand, it will work as a strong impetus for the country to really melt into the global economy. As a WTO member, China will enjoy a lot of preferential policies available to member countries to bolster its own development and strengthen its communication with more advanced nations.
To meet the fierce challenges of WTO accession, China should urgently reshuffle its economic structure, lower production costs, strengthen international co-operation, lure more talented personnel from all over the world and introduce more funds and high technologies to agriculture.
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