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How the Changing Enterprise Income Tax Law Affects PRC Companies Investing Overseas

Although many countries in the Asia Pacific region and Europe have yet to recover from the 2009 financial crisis, the Chinese economy continues to boom. With an average GDP growth of 9 per cent over the past 10 years and a continuous trade surplus, China has extremely healthy foreign currency reserves and has built up substantial purchasing power. The promulgation of the “Administrative Measures for Outbound Investment”, issued by the Ministry of Commerce with effect from 1 May 2009, reflects the Chinese Government’s understanding of the desire of PRC companies to invest abroad and the need to implement more measures to encourage and monitor such outbound investment. Under the “Going Out” policy, mainland investors have gained more opportunities and a wider range of options for accelerating their global expansion. Having said that, many aspects of the tax regime are also changing. This article focuses on how these changes affect Chinese companies investing overseas.