The current tax system prompted some domestic players to transfer capital overseas and then invest in the domestic market to enjoy the lower rate on overseas capital.

"The new corporate income tax law will add to foreign banks' tax in China on foreign currency business, but allows them to have a rate reduction on the yuan business to offset that effect," said Ryan Chang, a tax partner of Deloitte Touche Tohmatsu.

At present, overseas banks pay 18 percent tax on foreign currency products while paying 33 percent on yuan products.

The new corporate income tax law means a higher tax levy on foreign banks and lower tax burden on domestic banks. However, locally incorporated overseas banks can offer a full array of products, broadly expanding their income channels, Chang noted.

His view is echoed by Walter Tong, a tax partner at Ernst & Young.

"Overseas companies are no longer eyeing China as a place with low labor costs or a lower tax rate," said Tong. "The big market itself is the ultimate driving force for more foreign players to rush into the country."

Raymond H.K. Yu, general manager of Bank of East Asia's China division, said the Hong Kong-based bank will charge no account management fees for clients, even if they open an account with just one yuan deposit.

BEA aims to build up its brand with more products and service options for China's emerging middle class, he noted.

Overseas banks with big ambitions in China are all gearing up to offer more products.

Standard Chartered Bank plans to offer mortgages, credit cards, personal loans and wealth management to local Chinese after its incorporation.

Standard Chartered also plans to kick off a private banking service, targeting the high-end millionaire pool in the second half of this year.

Credit cards, mortgages and private banking are seen as lucrative sectors with China's emerging numbers of middle class and super rich clients.

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