Thirty Years of Turbulence - Chinese Enterprises

作者：admin  点击次数：29  发布时间：2025-11-12

In June, the State Council approved and forwarded the Ministry of Finance's "Trial Measures for the Tax Reform of State owned Enterprises", agreeing to change the long-standing profit payment method to a proportional taxation system. State owned large and medium-sized enterprises with profits shall pay income tax at a rate of 55% based on the realized profits. The retained profits of enterprises shall be paid to the national finance through methods such as incremental lump sum payment, fixed proportion payment, adjustment tax payment, and fixed lump sum payment according to different situations. State owned small and medium-sized enterprises will implement an eight level progressive tax system, where after paying income tax, the enterprises will be responsible for their own profits and losses.

The transformation of profits into taxes is the first important measure for state-owned enterprises to reform their modern corporate governance system. It liberates enterprises from the "fatherly" monopoly, even though this "liberation" has just begun and the income of the "father" is still the "big head". From the future implementation, it can be seen that the "profit to tax reform" objectively mobilized the enthusiasm of enterprises and partially eased the tense relationship between enterprises and the competent authorities. However, there are still many hidden problems, including a single tax category, which makes it difficult to leverage the role of taxation in regulating the economy; The distribution of after tax profits is still relatively complex and arbitrary. More importantly, it does not involve how to define responsibility when a company experiences risks and losses. The state-owned economy is still a 'big pot of rice', and the 'profit tax reform' only partially solves the problem of enterprises and supervisory departments competing for food.