AmCham-China

New Regulations on Corporate Income Tax on Gains from Transfers of Equity Interest by Non Resident Enterprises

In an attempt to strengthen regulation of corporate income tax (“CIT”) on gains from transfers (“Transfers”) by non-tax resident enterprises (“NTREs”) of equity interest in tax resident enterprises (“CTREs”), on December 10, 2009, the State Administration of Taxation issued Guoshuihan [2009] No. 698 (the “Notice”). The Notice focuses on Transfers that potentially could be viewed as structured by NTREs to avoid CIT in China and grants Chinese tax authorities power to conduct substantive review of, and adjust CIT on, such Transfers.

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