Published In

British Tax Review

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corporate taxation; China


The story of China’s income taxation of corporate reorganisations falls into four distinct periods. The first years of the development of a market economy were a period of benign neglect as tax authorities came to grips with a new tax system and some domestic taxpayers exploited unintended exemptions for reorganisation transactions. A dialectic emerged during the second period of reform with a shift towards a more conventional company tax system based on widely-accepted normative tax principles, while at the same time concessional rules were enacted for transactions favoured by the economic planners. The third stage saw a winding back of concessional rollovers while the current stage has seen a further rollback of some concessions and at the same time the introduction – and apparent importation from Western countries – of new ones.