BEIJING--China's tax authorities said they would step up
supervision of multinational companies as part of a crackdown on
tax avoidance, the official Xinhua News Agency reported.
China will conduct a comprehensive audit of the profit levels of
foreign companies to make sure that there is no "base erosion and
profit shifting," said Zhang Zhiyong, a deputy director of the
State Administration of Taxation, Xinhua said Monday.
Mr. Zhang also said China would coordinate with other countries
in the campaign.
Xinhua reported last month that a U.S. multinational will pay
the Chinese government $140 million in back taxes and interest
after Chinese authorities found the firm had avoided taxes.
The U.S. firm, which it referred to only as "Company M," agreed
to pay 840 million yuan ($135.5 million) in back taxes and
interest, according to Xinhua. The firm also agreed to pay more
than 100 million yuan in additional taxes every year, Xinhua
reported.
Xinhua described the company as being globally well known and
having long been among the world's top 500 companies. It said the
U.S. firm set up a wholly foreign-owned enterprise in Beijing in
1995.
The description matches, at least in part, that of U.S. software
giant Microsoft, a Fortune 500 company that set up its Chinese
subsidiary Microsoft (China) Co. in Beijing in 1995.
Microsoft would neither confirm nor deny that it was the company
referred to in the Xinhua report, but said on Tuesday: "Microsoft's
profits are subject to the appropriate tax in China."
--Richard Silk contributed to this article.
Write to Grace Zhu at grace.zhu@dowjones.com
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