China Daily Global Edition (USA)
Chinese multinationals urged to prepare for change in global regulations
China’s multinationals should be ready for the changes resulting from the deal in setting a global minimum corporate tax rate of 15 percent, analysts said.
Zhang Wenchun, a researcher at the International Monetary Institute of Renmin University of China, said that as a core member of the G20, China supports new international tax rules and shares Chinese wisdom and solutions.
He said that although China’s multinationals are increasing their global presence, most of them are unlikely to be affected by the deal, as their annual turnover and profit margins have not yet reached the thresholds it stipulates.
However, some internet enterprises with a high degree of internationalization may be affected, so they need to respond positively to the changes, he said.
“In keeping with our commitments, China needs to revise the tax law, update bilateral tax agreements, adjust various preferential provisions, and make them comply with the requirements of the new international tax rules,” he said.
Wang Peng, a tax partner with PwC China, said the pace of reforming the international tax system is “unstoppable”, although some technical problems need resolving before the new international rules are implemented.
He said that as the corporate income tax rate in China is 25 percent, most Chinese companies will not be affected by the new rules. But the effective tax rate for some companies in certain industries is less than 15 percent, due to preferential policies. These enterprises may need to pay more tax once the new rules take effect in 2023, he added.
Wang said Chinese enterprises still have about a year to fully adapt to the new rules, upgrade their tax control systems, review overseas operational structures, and prepare for the forthcoming regulations.
Such companies will need to consider the possible impact of the new rules if they want to invest overseas and enjoy preferential tax treatment in different countries, he added.