taxation

Topics: Tax, Income tax, Taxation in the United States Pages: 4 (1203 words) Published: February 10, 2014
Introduction

As far as we know, the corporation tax rate in United State of America is high. It is one of the highest corporation rates in the developed world which reach to 35%. In order to reduce the tax burden and make them more profitable, more and more American corporations choose to stash their cash overseas, since the developing countries such as China use tax incentives to attract foreign firms to support economic growth. Launching business in the developing countries become the strategy help foreign firms to increase their after-tax returns. For example, General Electric keeps only 30.7 billion of its 85.5 billion in cash reserves in the U.S., while intends to invests more than 1.5 billion in joint ventures with Chinese state-owned companies in “key high-technology sectors”. The purpose of the paper is to present the forms of foreign investment enterprises can be taken in China and the different tax incentives are used to induce foreign investment enterprises, then to analyze their influence on selection of a particular form of FIE. Body

China developed one of the biggest market in the world and is attracting more and more global investors to move into China's market. It is necessary for foreign investor to understand all the potential tax costs would be incurred in China before making an investment decision in order to operate business in a most efficient way. Learning the regulation of taxation is the first step for foreign investors who decide to invest in China. The investment forms of FIE in China

In China, foreign investment enterprises take four forms which is representative office, equity joint ventures, contractual joint ventures and wholly foreign-owned enterprises. Equity joint venture takes the form of limited liability corporations which mean Chinese and foreign partners jointly invest and manage the operations. There is a 25 percent minimum foreign participation requirment. The percentage of the capital investment determines the...
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