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[T67]Tax Incentives For Business

by Richard Chapo, Ric

Tax Incentives for Saving for Education

Higher education in America is an expensive proposition. If you have a child in college, I hardly need to tell you this. While every parent is proud of a child pursuing education, the glorious event can make for some sleepless night when thinking about how to pay for it. If you have young children, the government has taken steps to make saving for college attractive from a tax perspective.

There are a number of different tax incentives to promote saving for education. One such program is known as the Coverdell.

A Coverdell account is designed to promote education savings by removing part of the tax penalty of doing so. The basic idea is that any money distributed from the account will not be taxed so long as distributions don’t exceed the expenses of pursuing education. Here is how it works.

An account is set up for a beneficiary – the child. You can open one account per child and contribute up to $2,000 a year. The beneficiary must be under 18. Obviously, this is a long-term strategy since contribution amounts are limited. Nonetheless, here are some key things to understand:

1. Distributions are not taxed, but must be used for education costs such as tuition, books and so on.

2. The school can be public, private or religious and the money can be used as early as elementary school, to wit, this particular platform is not just for college.

3. You can use this strategy in addition to the hope and lifetime learning strategies, i.e., they don’t cancel each other out.

4. If distributions do not go to education expenses or are more than said costs, the beneficiary is taxed like income tax and a ten percent penalty is added.

5. If the beneficiary completes school or does not go, the account may be rolled over to another family member.

All and all, the Coverdell plan is definitely a long-term strategy. Start one now for your young child, however, and you will be happy you did when the tuition bills start arriving.

Chinese foreign investment law and local policies offer many tax breaks and other financial incentives to encourage foreign investment, particularly with respect to Enterprise Income Tax (the equivalent of US corporate tax). Keep in mind that China intends to phase out these favorable policies toward foreign capital over a five-year period in line with its WTO commitments. Nevertheless, it remains unclear whether China will raise FIE tax rates, lower general tax rates, or simply use nationality-neutral standards that will nevertheless disproportionately benefit FIEs

National incentives vary according to how much you are investing and whether your project is located in special economic zones; local incentives vary according to jurisdiction and relative bargaining power. In recent years China's central and western provinces, starved of foreign investment relative to the coastal areas, have been offering incentives that are in some cases considerably more generous than their coastal counterparts. The national government is now encouraging foreign investors to invest in China's relatively undeveloped hinterlands in order to distribute wealth evenly throughout the nation and reduce the flow of economic migrants to the coast.

Other taxes include:

* Withholding Tax - a withholding tax of 10% is imposed on China-sourced
income derived by foreign corporations without permanent establishments in China (FIE
profits distributed to foreign investors are one of several exemptions to this rule).

* Customs Duties are levied on imported goods and materials, and applicable rates vary. “Encouraged” category FIEs may apply for specific exemptions applicable to equipment imported for their own use (see the Foreign Investment Guidance Catalog for a list of Encouraged activities).

* Value Added Tax (VAT) - sales of goods and some services within China are usually subject to VAT at rates of either 13% or 17%. Imported goods may also be subject to VAT. “Encouraged” category FIEs may apply for significant exemptions applicable to imported equipment for their own use (see the Foreign Investment Guidance Catalog for a list of Encouraged FIE activities).

* Consumption Tax - Basically a “sin” tax - certain goods that are defined as luxury items or unhealthy products are subject to consumption tax at rates ranging from 3% to 45%.

* Land Use Tax - local governments may impose land use tax at a rate determined
by the local government within guidelines set by the State Council.

* Land Appreciation Tax - upon disposal of real estate, the seller is usually liable for Land Appreciation Tax at graduated rates of between 30% and 60%.

* Business Tax is levied at rates of 3% - 5% for certain services including insurance, construction, and assignment of various intellectual property rights. Entertainment services are taxed at a rate of between 5% and 20%.

* Motor Vehicle Acquisition Tax - acquisition of various types of motor vehicles
(such as cars, motorcycles and certain trucks) are taxed at a 10% rate.

* Deed Tax - transfers, gifts and exchanges of land use rights and buildings are taxed
at rates of 3% - 5%.

National Tax Preferences for FIEs
Sample Local Tax Preferences for FIEs
Sample Industrial Park Tax Preferences for FIEs
Individual Income Tax

Article Source : Tax And Financial Services

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Both Richard Chapo & George Silver are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Richard Chapo has sinced written about articles on various topics from Finances, Tax Deductions and IRS Tax. Richard A. Chapo is with BusinessTaxRecovery.com - providing information on .. Richard Chapo's top article generates over 74000 views. to your Favourites.

George Silver has sinced written about articles on various topics from Site Promotion, Joint Venture and Tax. David Carnes is licensed to practice law in California. He speaks and reads Mandarin Chinese and has several years experience working with Chinese law firms and Sino-American joint ventures. Check out his website,. George Silver's top article generates over 1300 views. to your Favourites.