"As of Dec 1, China begins to charge foreign companies two taxes, which helps finance local city maintenance, construction, and schools. Domestic firms now pays this tax."
China has came a long way in the last 30 years from when the country was in an economic standstill. The country was finally opened up to foreign investment. Since then China has been expanding its economic influence on the world. China has been attracting foreign companies by giving them hefty and exclusive tax breaks.
China has gradually shifted into more of a market economy and more equal treatment for foreign and domestic companies is being put into place.
The first change came in 2008 when the income tax rates were equalized to 25%. Foreign firms were originally at 15% while domestic firms were at 33%. Many foreign companies were not happy about this, but if they wanted to stay in the country and continue to enjoy the benefits then they would have to adjust. That's what many did...adjusted.
Foreign companies in China will now just have to do the same with the new taxes being put into place. China is smart by doing this because they know that companies will not leave and will do whatever they can to stay in China. China is going to continue to expand and foreign companies would be crazy to leave because of a few new taxes.
http://www.chinadaily.com.cn/china/2010-12/01/content_11638359.htm
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