China Tax Guide (review)

Reviews 203 Michael J. Moser and Winston K. Zee. China Tax Guide. Second edition. NewYork: Oxford University Press, 1993. 316 pp. Hardcover $38. This second edition of China Tax Guide provides a general introduction to the taxation of foreign nationals and foreign business operations in the People's Republic of China. It consists of four parts as follows: an introduction to China's tax system; forms of doing business in China and their tax consequences; explanations of the main types of tax; and special tax regimes in the special investment areas plus some bilateral tax treaties between China and other countries. The content of this book can be divided into four groups. In group 1 (chapter 1), the authors describe China's aim in fhe taxation of foreigners, the principal taxes in China, tax legislation (which is usually separated into three sections), and tax administration. Then, in group 2 (chapters 2 and 13), they describe the most common forms ofbusiness transactions and their main tax consequences from a transactional perspective. The forms of doing business in China discussed here are Sale and Purchase; Compensation Trade and Processing and Assembly Operations ; Financing Transfer; Consignment Sales and Service Centers; Representative Offices; Contracted Projects; Equity Joint Ventures; and Co-operative Joint Ventures and Wholly Foreign-owned Enterprises. In group 3 (chapters 3 to 10), Moser and Zee cover the structure and regulation of nine principal types of tax in China: the Individual Income Tax (chapter 3), the Joint Venture Income Tax (chapter 4), the Foreign Enterprises Income Tax (chapter 5), the Unified Tax (chapter 6), the Consolidated Tax and Related Taxes (chapter 7), the Real Estate Tax (chapter 8), the Vehicle and Vessel Licence Tax (chapter 8), the Stamp Tax (chapter 9), and Customs Duties and Related Taxes (chapter 10). In each of the first four chapters mentioned above, the authors give the definition and the scope of the specific tax, and then focus on the calculation, with concrete examples for every step. The calculation usually includes explanations of Accounting Rules, Deductions, Depreciations, Amortization, Valuation of Inventories , Intercompany Expenses, Losses, Capital Gains, and Transferring Pricing, if necessary. The book also mentions tax rates and holidays, reinvestment ofprofits, credits, tax payment, penalties, and so on. For the last five types of tax in group 3, the authors describe the related regulatory framework and the manner in which it is applied in practice. Tax exemptions and deductions are mentioned in these chapters. Finally, in group 4 (chap-©1994 by University ters xl and 12), the book details the preferential taxrules developed for application in the Special Economic Zones, the Pudong New Area, the Fourteen Coastal 204 China Review International: Vol. 1, No. 2, Fall 1994 Cities, the Economie and Technological Industrial Development Zones (ETIDZs), the Coastal Economic Zones, and High and New Technological Industrial Development Zones, and China's bilateral tax treaties with a number of other countries. The book satisfies the foreign investors' interests most in chapter 11, which provides an overview of the tax rules in some of China's special investment areas and focuses on tax exemptions and deductions available to foreigners. China Tax Guide provides an impressively concise and yet comprehensive introduction to China's increasingly complex tax system as it was in operation before 1994. The two authors tried their best to keep the book up-to-date, since some tax rules discussed in it were promulgated as late as 1991. The book is easy to understand because there are many practical examples employed by die authors to illustrate the application of the legislation under discussion. It is of great value especially for foreign companies and foreign investment enterprises in China. Besides the concrete examples mentioned above, fhe book also tells readers what kinds of organizations are subject to what kinds of tax in China. A foreigner can easily grasp the related content of China's tax system, which covers over four decades (from fhe 1950s to Aie 1990s). The book also displays Specimens of Tax Forms in China, translated Selected Legislation, a comparative chart of ChineseForeign Tax Treaties, and some tables concerning specific tax rates. All these provide readers with greater details of China's tax system, and this...