The draft of the proposed new corporate income tax law submitted to China’s cabinet for approval last Wednesday included eight hi-tech sectors that would still enjoy preferential tax rates of 15%, the Shanghai Securities News reported. Firms in the electronic and information technology, biotechnology, aviation and aeronautics technology, new materials technology, hi-tech services, new energy and energy efficiency technology, resource and environment technology, and hi-tech manufacturing sectors will benefit from the preferential rate. However, firms must invest between 3% and 6% of their total revenue in research and development to qualify. Under the proposed rules, the tax rate for foreign firms will gradually be raised from 15% to 25% over five years, starting from January 1, 2008, while the rate for domestic firms will be lowered to 25%. Foreign firms entitled to five tax-free years plus a 50% tax rebate for a further five years will continue to enjoy the concessions for the full 10 years. The 15% rate will continue to apply until 2010 for foreign firms that invest in central and western China.