Sources say the legislation for a unified tax package will be completed this year and the policy will be launched next year. But the old policy will remain valid for a certain period of time in west China. Consistency of favorable taxes which have been promised to foreign investors will be secured till the date of expiration.

Mr. Warrick Smith, leader of the core team writing the World Development Report 2005: a better investment climate for everyone, told the International Finance News that tax differentials in many countries did not make much difference on businesses' decision on where to invest.

He made further analysis on investors with different motives. Those targeting at local market are not affected much by tax policy as they do not have any other choices. And for those who take the local market as a platform for their exports, taxes will not be considered as the most important. The infrastructure, technical skills of the labor force and logistics account more.

However, Mr. Smith also stressed that the expectation of investors was also very important. If investors' decision is based on a certain favorable tax treatment, they should not be disappointed too much in this period. Mr. Smith thinks a transitional period is very important in this case.

Sources say the legislation for a unified tax package will be completed this year and the policy will be launched next year. But the old policy will remain valid for a certain period of time in west China. Consistency of favorable taxes which have been promised to foreign investors will be secured till the date of expiration.

By People's Daily Online