Source: CCTV.com

03-20-2008 11:22

China has temporarily suspended the collection of corporate taxes from mutual funds. This is the latest official move to give a boost to flagging stock markets.

China has temporarily suspended the collection of corporate taxes from mutual funds. This is the latest official move to give a boost to flagging stock markets.

The Ministry of Finance and State Administration of Taxation jointly issued rules temporarily exempting various securities-related activities from corporate income tax. These include income from the trading of stocks and bonds and dividend income.

He Qiang, Central University of Finance & Economics said "This policy will promote the development of the mutual fund industry and will encourage more investors to buy funds. This will definitely help the stock market."

Most mutual funds have taken a dive since the country's main stock index fell below 4-thousand points last week. More than 90 funds have slid below their unit value of one yuan. Insiders say more needs to be done to revitalize the stock market.

He Qiang said "We should take measures targeting both supply and demand. On the one hand, we should cut new share issues to reduce pressure on market capacity. On the other hand, we should encourage more capital to enter the market."

Mutual funds make up the most significant group of institutional investors in China. And the mutual fund industry is of one of the most open to foreign investors, who are allowed to hold up to 49 percent in joint ventures with local partners.

Editor:Xiong Qu