Adjustment of import tax policy highlights characteristics of China's economic transition

The four ministries and commissions of the Ministry of Finance of the People's Republic of China stated that it is necessary for domestic companies that meet the regulations to produce large-scale environmental protection and resource utilization equipment, emergency diesel generator sets, airport baggage automatic sorting systems, and heavy duty die forging hydraulic presses to support the development of the country. Key spare parts and raw materials are exempted from customs duties and import value-added tax.

The import tax policy adjustment mentioned above will be implemented as of June 1, 2010. Judging from the above policy formulation, although it is a case, it is part of the entire “Twelfth Five-Year Plan” and is a concrete manifestation of economic restructuring. Foreign trade policies also serve the economic transformation. In our view, China’s relevant taxation policies in the future will show two tendencies: “the tendency of technology introduction” and “the tendency of independent innovation”. Any import that is conducive to the introduction of technology and conducive to the promotion of independent innovation will be subject to relevant preferential tax policies. In addition, it should be noted that the “domestic enterprises” in the policy may not only be state-owned enterprises or private enterprises, but also include foreign-funded legal person companies registered in China.

Since the beginning of this year, foreign investors in China have complained about the change of attitude of the Chinese government toward foreign investment. They believe that China has already generated more and more discrimination in its independent innovation policy and government procurement policy. However, we have already pointed out that these changes must be divided into two. From the perspective of China, on the one hand, China still welcomes foreign investment. On the other hand, it has indeed gone through the phase of using foreign investment to attract foreign investment since the reform and opening up.

In the future, with the continuous development of economic transition, it will be a general trend to gradually increase the level of domestic and foreign investment. Changing the development model with independent innovation policies is also an established national policy and will not easily change. However, for foreign investors, adjusting their own operating structures and tactics and fully adapting and utilizing the relevant policies of the Chinese government is the only way out. Complaints are useless. For instance, the change in the import tax policy is a place worthy of attention from foreign investors.