China to regulate preferential tax policies

China will regulate preferential tax policies, forbidding local taxation authorities from making such policies, according to a statement released Tuesday by the central government's website.

The State Council, China's cabinet, recently issued a notice on trimming local preferential tax measures that may impair market mechanisms and macro controls, in some cases leading to international trade frictions.

The statement stressed that the move aims to build a more orderly and open market and fight against regional protectionism, seeking to eliminate the barriers hindering free flows and give full play to the dominant role of market in resource distribution.

Adhering to the tax statutory principle, the regulation bans any form of preferential tax policies without approval by the State Council, except for the tax administrative privilege set by laws.

The notice also demanded higher standards for managing non-tax revenues from selling land, state-owned asset and illegal exemption from compulsory fees.

Meanwhile, fiscal expenditure shall be strictly arranged to abolish any kind of illegal returns, subsidies and discounts.

The notice set a deadline for local governments to give detailed reports on their regulation processes to the Ministry of Finance by the end of March 2015.