A draft corporate tax law to unify taxes for domestic and foreign-invested enterprises is expected to be tabled soon for a first reading by the Standing Committee of the National People's Congress, Xinhua reports.

An agreement on the draft law has been reached among local authorities and governmental departments, although a further technical revision of the draft cannot be ruled out.

Pursuant to the draft, the unified tax rate will fall into the 24-27% range, which is lower than the maximum rate of 33% now paid by domestic firms and higher then the 15% rate paid by foreign-invested companies. Foreign-invested companies may be able to get a three to five-year transition period under the draft law.

Chinese authorities had intended to submit the draft to China's legislature for a first reading in August 2006, but objections from foreign investors over the increased tax rate and concerns over the reduced inflow of foreign investment because of the proposed removal of the tax incentive led to delays.

Taxation privileges will no longer be used to attract foreign investment, but instead the tax policy will be used to upgrade and develop China's high-tech sector, infrastructure facilities and environmental protection, according to the Ministry of Finance's tax policy department.