Will those tax breaks offered to foreign investors disappear after China's accession to the WTO?
Adherence to WTO principles requires extending national treatment to foreign investors, which means that tax benefits enjoyed by foreign investors will be phased out. Since some FIEs are established to export their products to overseas markets, it is arguable that such tax breaks will constitute indirect export subsidies, which is contrary to WTO principles. Now, the State Administration of Taxation (SAT) has been working on a general overhaul of China's tax system with the goal of complying with China's WTO obligations, while leveling the play field for domestic enterprises, many of which have long complained about tax incentives available only to FIEs.
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