Tax Levy and Administration News
- China to write off tax arrears for struggling northeast industries
Date: 9-Jan-2007 Sources: (People's Daily)
China's Ministry of Finance has issued a circular waiving tax arrears for companies in three northeastern provinces -- Heilongjiang, Jilin and Liaoning.
Companies in the region, often referred to as China's rustbelt, will be exempted from paying taxes incurred prior to Dec. 31, 1997, according to the circular.
'The measure will lighten the financial burden on companies which are restructuring,' said Jia Kang, director of the Ministry's financial section, adding that the measure will help revitalize industries in the region.
According to the circular, the policy applies to all state-owned and non-state-owned enterprises in the region, but not to companies with a record of dodging or evading taxes.
Currently, local finance authorities are collecting information on the number of companies eligible and the amounts involved. The information will be reviewed by provincial finance departments before being submitted to the Ministry of Finance.
'We will ensure that companies which are not eligible do not benefit from the measure,' China Economic Weekly quoted Wang Lijun, a tax director with the Department of Finance in Heilongjiang Province, as saying.
Once considered the vanguard of China's state-owned industry, the region, also known as the 'old industrial base', is home to thousands of inefficient state-owned manufacturing and heavy industrial firms and has been hit hard by economic reforms since the 1980s.
Rejuvenating the region is a government priority. A slew of projects have been implemented to reinvigorate northeastern industries, including tax breaks, tax reductions and channeling foreign capital into the region.
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