By Wang Biqiang
Published: 2007-11-27

From Cover, issue no. 343, Nov 26th 2007
Original article:

The EO has learned that the new Corporate Tax Law's Implementation Details, which have undergone several revisions, has been submitted to the State Council for approval. It is said that at the earliest it will be passed in the last few days of this month.

The Corporate Tax Law was passed by the National People's Congress this past March. But ambiguity in the law has left businesses and related governmental agencies holding their breath while they await further clarification, which is to come in the form of the Details. Since the overwhelming majority of content in the law must be fleshed out by the Details, the earliest draft of the latter contained around 200 clauses. But due to controversy and debate surrounding it, it's original target date for passage this past June became an impossibility, and was pushed back.

In order to be completed before the law comes into effect on January 1st of 2008, the Details' most contested sections were removed by its drafting team, who promised to quickly settle them. Now, after countless drafts and revisions, they are finally being sent for approval, standing at 120 or so articles.

An official from the legal working office of the State Council revealed to the EO last week that this latest draft contains no surprises and will be passed by the Council by the end of the month.

Wu Jiayuan, a partner at Deqin Accounting, joined the last of the Details' drafting sessions in October. According to him, the five “big suspenses” are solved by this draft-- recognition of high-tech industries, taxes on foreign stock dividends, anti-tax evasion and transfer pricing, preferential taxes and transitionary period/ pre-tax deductions.

Another source tells the EO that because most of the controversial topics were eliminated from the Details early on in the drafting, and thus leaving it vague, related departments will still have to publish their own more detailed regulations after its passage. And even then, there is still the possibility that it will be slightly revised.

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