The impact of the chinese enterprise income tax reform on the reinvestment incentive of foreign invested companies

• Autores: Carmen Bachmann, Martin Baumann, Yiping Zhang
• Localización: Intertax, ISSN 0165-2826, Vol. 43, Nº. 3, 2015, págs. 263-275
• Idioma: inglés
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• Resumen

  • Foreign direct investment (FDI) is a major driver of the Chinese economy. In 2008, China introduced a new Enterprise Income Tax (EIT) Law, which abolished many tax incentives for foreign invested enterprises (FIEs). This article reviews and analyses the effect of tax reform changes on the reinvestment behaviour of foreign-owned Chinese subsidiaries considering the foreign tax system and leverage ratio. It can be shown that the EIT reform resulted in a significant increase in the reinvestment hurdle rate of FIEs.