Traps for the unwary in new income tax law.

The article discusses the provisions of the Chinese Enterprise Income Tax Law. Under the law, income tax rates, deductions and preferential income tax policies and tax laws for local, foreign-invested and foreign enterprises will be unified. A 25 percent tax rate will be applied for all enterprises. The law also applies a withholding tax rate of 20 percent, offers preferential rates for certain types of enterprises and provides transitional rules for favorable tax rates for foreign-invested enterprises tax rates.