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China Resolves to Adopt More Strict Tax Regulations

January 21, 2015

China is determined to crack down on foreign companies’ tendency to avoid taxes.

After China collected nearly $140 million in back taxes from Microsoft, the nation’s tax authorities have decided they need to be more vigilant in monitoring tax avoidance by foreign companies.

Change Needed

Chinese president Xi Jinping and deputy director of the State Administration of Taxation (SAT) Zhang Zhiyong have decided that reform is necessary, and plan to combat international tax evasion by:

  • Considering the latest BEPS findings and make improvements to corresponding tax laws and regulations.
  • Establishing a monitoring system to understand Chinese multinationals’ profit levels and target response to international tax risks.

Due to China’s harsh enforcement of antimonopoly regulations, the increased tax regulations may cause issues for multinational companies. For a more detailed description of the intended reform, read our article, “China vows to toughen stance on tax avoidance by foreign companies”.

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