Thursday, January 03, 2013

CHINA: TAXING POLICY

Restrictive tax policy will affect China’s foreign investment flows

The move definitely fills the pockets of the Chinese treasury, but it would discourage the institutional investors, who would withhold their investment plans fearing the possibility of paying higher tax. Moreover foreign investors, who are reliant on dividend payouts, would act more cautiously before dishing out their hard earned money for the Red Chip companies. This would not only have implications on the companies but would also affect the huge foreign investments which China gloats over.

“It is important for China to rebalance its pattern of growth to get more growth from services and consumption, and less from industry,” explains Dr. Louis Kuijs, Senior Economist, World Bank. A more rational tax policy combined with shift in focus from manufacturing to other industries is what China needs to continue its double digit growth. Shells are best left exported!


Source : IIPM Editorial, 2012.
An Initiative of IIPMMalay Chaudhuri
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