Tax changes to boost western regions
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China will cut corporate income tax in the country's western regions and will alter resource taxes there as part of a strategy to boost development in a poor and remote part of the country.
Corporate income tax in west China will be slashed to 15 percent from 25 percent now, Premier Wen Jiabao said at a work meeting in Beijing yesterday.
The economy of China's vast west - an area that stretches from the grasslands of the Inner Mongolia Autonomous Region to the forests of Yunnan Province and deserts of the Xinjiang Uygur Autonomous Region - has lagged far behind that of the booming eastern coastal regions.
Over the past few years China has raised investment in transport links with its remote west, and unveiled measures to encourage companies to set up factories there, as well as built new schools, hospitals and houses.
We must "enable the resource advantages of the west to be transformed into economic advantages," Wen said.
The premier also confirmed resource taxes on coal, oil, gas and other natural resources in west China will be based on sales price, instead of output.
The Ministry of Finance said last month that Xinjiang had started levying a 5 percent resource tax on crude oil and gas sales.
Expanded to more regions, this change to the way the resource tax is levied would cut the profitability of producers while feeding more revenue to local governments.
Companies that could be hit include Shenhua Energy, Jiangxi Copper, PetroChina and Sinopec.
