An endeavor by Group of Seven nations to set minimum global tax rates for big companies presents a rare opportunity to satisfy objectives of both the U.S. and China. Still, Beijing’s support for the proposal isn’t a foregone conclusion.
’s presidency. But while Beijing could use the opportunity to seek a U.S. concession in return for its support, China has historically backed international tax initiatives and may be unlikely to block a measure that already has the support of other big economies.
. China has criticized what it sees as a drift toward unilateral policy-making and efforts by Western nations to dictate policy to Beijing.told U.S. Secretary of State Antony Blinken that China wouldn’t follow “what is advocated by a small number of countries as the so-called rule-based international order.” While the immediate context to Mr.
Given its past support for global efforts to tighten tax governance, there is a likelihood it will support the G-7 proposal, says Henry Gao, an expert in Chinese trade and law at Singapore Management University. He recalls that just a few years ago, Beijing criticized Trump administration tax cuts as a self-serving bid to use taxes to pull investment into the U.S.promoted by the Organization for Economic Cooperation and Development.
The corporate tax rate in China can be reduced to 15% for “qualified enterprises which are engaged in industries encouraged by the China government,” including certain technology businesses, according to a summary of the country’s policies by PricewaterhouseCoopers LLP. PwC also notes that some foreign investors in China enjoy tax holidays and other incentives.
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