Director Xie Xuren of the State Administration of Taxation said on Friday preferential tax policies will continue.

This means companies that provide jobs for urban jobless would get preferential tax policies as would unemployed people who start their own companies, insiders said.

The government would also push forward tax and fee reforms in the rural areas to reduce the financial burden for farmers, he said at an annual tax working conference in Beijing.

"The government will reduce more of the agriculture tax rate next year," he said. "And exemption of the agriculture tax will be expanded to more areas."

Five provinces and municipalities including Shanghai, Beijing and Fujian already dropped the agriculture tax this year.

The agriculture tax rate in 11 major grain production provinces was also cut by 3 percentage points.

The provinces of Henan, Hainan, Shanxi, Guangdong and Jiangsu announced earlier this week they will abolish the tax next year.

Tax benefits will also be extended to companies involved in the development of western areas, the renovation of the old industrial bases in Northeast China, and development of the high and new technologies, Xie said.

The government also plans to reform the current tax system adopted in 1994, he said.

The tax rebate system, which allows for rebates of the value-added tax and consumption tax to exporters, will continue to be improved.

Zhang Peisen, a senior researcher with the administration's Taxation Research Institute, said the present macro-economic situation is favorable for tax system reform.

The government needs to take advantage of the favorable situation to improve the existing tax system, to make it more scientific and fair, he said.

Xie said the government will better carry out trial reforms on the value-added system started on July 1 in the provinces of Liaoning, Jilin and Heilongjiang.

The new system, which allows companies in the provinces' eight industries including equipment manufacturing to claim tax deductions when buying new machinery equipment, will expand to more areas later, he said.

The tax department will also co-operate with other relative departments to expand the consumption tax to more sectors, he said.

The tax department will study and make preparations for unifying the two different income tax policies for domestic and foreign-funded companies, he said.

The present enterprise income tax rates 33 percent on domestic companies and 17 percent on foreign-funded companies were considered unfair for domestic companies.

The government plans to unify the rates.

Finance Minister Jin Renqing said earlier this month the tax burden for foreign-funded companies would not change a lot, following the enterprise income tax reform.

Xie said that next year, efforts will also be made to improve personal income tax and property tax.

(China Daily December 25, 2004)