When setting up a PE fund, an effective investment structure that provides flexibility for exit options and capital structure while ensuring tax efficiency is crucial. The International Tax Service Team of PwC, with in-depth knowledge of the regulatory and tax environment of various countries and extensive experience in designing, advising and setting up investment structures, can help investors create an optimal fund structure for investments in China, analyse the PRC tax implications related to the PE fund structure and advise the Do's & Don'ts of activities carried out by PE funds to minimise PRC tax exposure.
Tax advisory and compliance services
Our specialists provide value-added tax (VAT), business taxes (BT), corporate income tax and other tax advisory and compliance services during the set-up of a fund by:
Providing day-to-day tax advisory services
Providing tax review of the compliance status
Liaising with tax authorities with regard to tax incentive applications
Individual income tax services
PE fund managers are rewarded at all stages of the PE fund life cycle, with a service fee attributable to each stage and a carried interest. They may need to consider the PRC and overseas individual income tax implications on income received due to activities carried out in the PRC as well as overseas. Equity-based compensation plans may also have PRC as well as overseas individual income tax implications.
Our tax specialists can help advise on the possible tax exposure of PE fund managers' activities in China and how such exposure may be mitigated. We also have experience in providing tailor-made solutions to portfolio companies that offer equity-based compensation.
Capital verification services
When applying for establishment, PE funds must appoint a professional organisation to verify the paid-in status of registered capital to meet the two requirements of capital registration with the company registration office and the issuance of investment certificate to investors.
PwC has the relevant qualifications and experience to take up such capital verification appointments from newly established PE funds.
Annual audit services
During the establishment stage, PE must comply with relevant local regulations for domestic or foreign owned funds.
PwC has extensive experience and knowledge to provide suggestions on how to set up financial frameworks that comply with local accounting standards and relevant regulations, and audits on financial statements prepared under IFRS, US GAAP or other GAAP.