On 16 March 2007, the National People's Congress of China promulgated a new Enterprise Income Tax Law (EIT Law) to take effect on 1 January 2008. It is the first law in Chinese history that imposes an income tax on all forms of enterprise. It replaces the current FIE Income Tax Law applicable to enterprises with foreign direct investment and the Interim Enterprise Income Tax Regulations (Interim EIT Regulations) applicable to Chinese-owned enterprises. Most notably, the EIT Law abolishes the tax incentives applicable only to foreign-investment enterprises (FIEs) and introduces a general tax rate that is internationally competitive. The promulgation of the EIT Law symbolizes the maturity of China's tax policy, China's commitment to the principles of the World Trade Organization (WTO) and China's confidence in its economic development policy. This article provides some background on this fundamental tax reform and an overview of the key changes and their implications.