What would happen to the tax incentives being enjoyed by existing FIEs in SEZs after a unified tax system is adopted?
Under such circumstances, grandfather rules are likely to apply to alleviate burdens imposed on existing beneficiaries of current incentives. The phase-out of geographically defined tax incentives for FIEs may be balanced by continuing incentives for the impoverished central and western provinces and possibly by continuing incentives for designated high-tech industries regardless of whether they are foreign-invested or domestically owned.
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