Beijing is expected to step up the fight against international tax evasion after China's first major anti-tax evasion case was revealed.
State Media Xinhua reported that a US multinational had admitted tax evasion and its mainland subsidiary had agreed to pay the central government 840 million yuan (HK$1.06 billion) in back taxes and interest, as well as more than 100 million yuan in additional taxes a year in the future.
Xinhua described the undisclosed company as "globally well-known company that has long been among the world's 500 biggest firms", headquartered in the US, and had established a wholly-owned foreign enterprise in Beijing in 1995.
The state news agency reported that for six years, the company accumulated losses totalling more than 2 billion yuan in China, yet its peers enjoyed a profit margin of more than 12 per cent in the Beijing market.
Hong Kong could be expected to cooperate with Beijing's efforts to combat international tax evasion because Hong Kong had a tax treaty with the mainland that included the exchange of tax information, Chan said.