(Yicai Global) June 7 -- US President Trump's ambitious tax plan will unloose a wave of global tax cuts, predicted Xu Shanda, former Deputy Director General of the State Administration of Taxation (SAT).
Many controversies still swirl around the degree to which the plan can be implemented, which l remains to be seen.
The final form of the US tax cut will surely differ from the original plan, but the consequences of the tax reduction will remain unchanged, Xu told Yicai Global June 5. China is planning and implementing a macro tax burden reduction, so the challenges are more severe for China. China needs to attend more to and speed up tax reduction.
"China must evaluate the influence of every type of tax on individual and enterprise competitiveness, and preferentially regulate tax types as against improvement of competitiveness to lessen the negative impact," said Xu.
The solutions Xu proposed include accelerating transfer of state-owned capital to social insurance foundations to further reduce social insurance rates and lower enterprise employment costs, further reducing the expenses of research and development even if the corporate income tax rate remains at 25 percent to improve enterprise competitiveness, and appropriately lowering the 45 percent top marginal income tax rate on wage earners to attract overseas high-end talents.
The US officially announced its largest tax reduction plan since 1986 on April 26 this year. It envisages the corporate income tax rate falling from 35 percent to 15 percent.