China Tax/Business News Flash

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Jul 2015, Issue 29

Upgraded tax administration and implementation for corporate restructuring rules


Corporate restructuring is important in optimising industrial structure and enhancing business competitiveness. In 2014 and 2015, the State Council has called for the improvement of tax policies for mergers and acquisitions (M&A) in China and cancelled the approval requirements of Special Tax Treatment (STT) for eligible corporate restructuring respectively. To answer the State Council’s call, the State Administration of Taxation (SAT) and the Ministry of Finance jointly released two substantive polices to encourage M&As in China, particularly in relation to the intra-group restructuring transactions. All these new policies require the support of more detailed implementation rules. Against this backdrop, the SAT issued SAT Public Notice [2015] No.48 (Public Notice 48).

As a supplement to SAT Public Notice [2010] No.4 (Public Notice 4) which currently regulates the CIT administration of corporate restructuring, Public Notice 48 clarifies the tax treatment for the corporate restructuring involving natural persons, sets forth a more stringent documentation and reporting requirement and enhances the post-filing administration on enterprises opting for STT. Public Notice 48 applies to the 2015 annual CIT filing and onwards. All enterprises undergoing or planning to undergo restructuring should study the impact of Public Notice 48 and comply with the procedural requirements stipulated therein.

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