What the Shanghai FTZ tax system might look like

September 18, 2013 | BY

clpstaff &clp articles

Tax breaks may not be enough to lure foreign investors to Shanghai's recently approved pilot free trade zone. The officials in charge of the zone will need to find more innovative ways to attract investors

Following the authorisation of the free trade pilot area (FTPA) on August 30, the market is full of rumours about Shanghai's plan for the Zone, which echoes the central government's financial and industrial reform vision

Lawrence Hu, a tax lawyer of MWE China Law offices in Shanghai, said that leaked comments from officials have indicated only select industries in the FTPA would be granted a reduced 15% corporate income tax (CIT) rate, while others will pay the nationwide unified 25% CIT.

“I think this approach is appropriate. If all companies are given the same tax reduction, it is just like the old days of launching the special economic zones in Shenzhen and Zhuhai. That would be dated,” said Hu.

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