Hastings International and Comparative Law Review


Anna M. Han


As part of the People's Republic of China's continued effort to strengthen and define its legal system, the Fifth National People's Congress promulgated the Income Tax Law Concerning Foreign Enterprises. This enactment reflected the Chinese Government's recognition that clear tax rules were needed which would assist tax planning by foreign investors. The Law and its accompanying Regulations were designed to fill major gaps in China's taxation system by reaching previously ignored major sources of income. This Article provides a general introduction to the various provisions of the Foreign Enterprise Tax Law and Regulations which remain unclear due to the newness of the Law and the lack of administrative history. Strategies for filling the gaps in the Law and Regulations and protecting the taxpayer are suggested. The author concludes that, with careful tax planning and detailed contract provisions, foreign investment in China can be a profitable venture.