Shanghai

CHINA will toughen its stance on tax avoidance by foreign firms to prevent tax payments being directed overseas, the official Xinhua news agency has said, after Beijing levied US$140 million in back taxes on US firm Microsoft Corp last week. Beijing will closely monitor the profit levels of foreign firms operating in China to ensure companies do not shift profits to other regions where taxes are lower, a practice known as "base erosion and profit shifting" (Beps), the Xinhua report on Monday said.

China is cracking down on business practices by overseas firms in China, with a series of probes by anti-trust regulators prompting business lobbies to say multinational firms were being singled out by Beijing. Xinhua reported last week that a US company whose name starts with "M" must pay the Chinese government 840 million yuan (S$178.9 million) in back taxes and interest, as well as more than 100 million yuan in additional taxes a year in the future.