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China’s Tax Corruption Investigations Pose Risks for Companies

July 18, 2019, 7:00 AM

China’s focus on stamping out corruption is stripping local tax bureaus and officials of their historic autonomy—all good news, so far.

But companies need to be cautious: While the focus on transparency would improve the tax collection, the resulting uptick in corruption investigations risks multinational companies getting caught up in probes due to special tax arrangements offered by grassroots officials.

Multinationals “should be more careful with the preferential treatment offered by local tax authorities,” Zhu Ning, professor of Finance at Shanghai Advanced Institute of Finance said in an email, in order to avoid being implicated in any local corruption cases....

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