information from: shenzhen tax service, state administration of taxation

[description]

where special tax treatment is elected for equity transfer by a non-resident enterprise, filing shall be conducted within 30 days after the equity transfer contract or agreement takes effect and the industrial and commercial registration of change is completed.

[materials required]

no.

materials  name

quantity

remarks

1

filing form for election of  special tax treatment on equity transfers by non-resident  enterprises

2


2

information on the equity  transfer transaction, including the business purposes, evidence in support of  the transfer's satisfaction of the qualifying conditions for special tax  treatment, and the shareholder structure charts before and after the  transfer.

1

materials in a foreign  language should be attached with the chinse translation. the same  applies to all other materials.

3

equity transfer contract or agreement

1


4

equity transfer contract or  agreement

1


5

information on the  accumulated retained earnings of the transferred enterprise as of  the time of equity transfer

1


6

other relevant  materials required by the tax authorities



[time limit]

1. for taxpayers

within 30 days after the equity transfer contract or agreement takes effect and the industrial and commercial registration of change is completed.

2. for tax authorities

instantly after acceptance of materials that are complete, compliant with the legal form, and fully filled out.

[result]

a tax affairs notice and the filing form for election of special tax treatment on equity transfers by non-resident enterprises will be given by the tax authorities.

[notice to taxpayers]

1. taxpayers are responsible for the authenticity and legality of the materials they submit.

2. taxpayers only need to visit tax authorities once if the materials are complete and the statutory conditions for acceptance are satisfied.

3. where a non-resident enterprise transfers the equity of a resident enterprise that it owns to another resident enterprise of which it directly holds 100 % of shares, special tax treatment may be elected, if the following criteria are fulfilled:

(1) the transfer is conducted with legitimate business purposes and the main purpose thereof is not to reduce, exempt or defer tax payments.

(2) the ratio of the assets or equity being purchased, merged or split satisfies the ratio set forth in relevant announcements.

(3) the original substantive business activities of the restructured assets remain unchanged for twelve consecutive months after the restructuring.

(4) the ratio of the consideration in the transaction settled by equity satisfies the ratio set forth in relevant announcements.

(5) the original major shareholder shall not transfer the acquired equity for twelve consecutive months after the restructuring.

where a non-resident enterprise transfers the equity of a resident enterprise that it owns to another non-resident enterprise of which it directly holds 100 % of shares, special tax treatment may be elected, if the abovementioned criteria are fulfilled, and no change to the liabilities of the withholding tax on the equity transfer arises therefrom, and the transferor submits to the tax authority in charge a written commitment not to transfer the equity that it owns in the transferee.

4. upon fulfillment of the criteria for special tax treatment, for a non-resident enterprise transferring the equity of a resident enterprise that it owns to another non-resident enterprise of which it directly holds 100 % of shares, the transferor shall make the filing with the tax authority at the place where the transferee is domiciled; for a non-resident enterprise transferring the equity of a resident enterprise that it owns to another resident enterprise of which it directly holds 100 % of shares, the transferee shall make the filing with the tax authority at the place where it is domiciled.

5. the equity transferor or transferee may entrust the filing to an agent. the agent shall submit to the tax authority in charge a written power of attorney made by the filing party at the time of filing.

6. for a non-resident enterprise to transfer the equity of a resident enterprise that it owns to another non-resident enterprise of which it directly holds 100 % of shares, such transfer of the equity of a chinese resident enterprise can be caused by the split or merger of foreign enterprises.

7. addresses of taxpayer service halls and the website of e-tax bureau are available on the web portals of tax authorities or by dialing the(86-755)12366 tax service hotline.

[charge]

free of charge.

(note: the text above is a translation of the chinese version for reference only. in case of any discrepancy between the two versions, the original published chinese version shall prevail.)