• Version
• Download 6
• File Size 190.68 KB
• File Count 1
• Create Date 4 四月, 2012
• Last Updated 11 三月, 2021

Growing Concerns: Indirect Equity Transactions in China

Foreign investors investing in Chinese companies will often use one or two tiers of intermediate offshore holding companies (“SPVs”). These SPVs are often established in jurisdictions that have low/no income tax on dividends received, exempt capital gains from taxation, and do not impose withholding tax upon further distributions to foreign investors. Paying tax in China on gains from the disposition of the equity interest in the Chinese company can often be avoided by disposing of the shares in the SPV rather than the Chinese company. However, indirect equity transfer is being closely scrutinised by the Chinese tax authorities. In recent years, China has made greater efforts than ever in collecting tax revenue from indirect transactions of local investments.