2010-04-27 15:00:26

Income Tax Law of the Legislative may provide 66 of the 9 amendments, corporate retained earnings up more than half the amount of capital to be distributed to shareholders mandatory whereas keeping the current practice of imposing 10% of return earning will prevent shareholders avoid paying tax.  The Ministry of Finance holds an "optismistic view." After business tax comes down to 17%, the company will retain the distribution of earnings, it will be conducive to shareholder tax avoidance, and it will be best supporting measures to restore the old system before the Income Tax Act.  Company's undistributed surplus amounted to more than half of the company's capital, must reinforce mandatory distribution.  Tax Director Xu Yu Zhe, said retained earnings will take years to reach half the capital, prior to 1998 when a "mandatory distribution," was implemented, many large enterprises rasied the companies' capital to avoid mandatory distribution.  Treasury Division collected no taxes, auditing and collection of taxes were difficult.  10% abolish levy will result in more than 200 billion or nearly 300 billion in tax losses annually.