Restructuring rules restructured
New tax implementation rules for corporate restructuring introduce internationally recognised concepts and clarify access to special tax treatments. Recently restructured companies should check their tax position carefully
Issue: June 2009
Keywords (click to search):
tax
restructuring
enterprise income tax
reorganisation
special tax treatment
The long-anticipated tax implementation rules for corporate restructuring were recently issued by China’s finance and tax authorities.
The Rules, officially titled the Circular on Several Issues Concerning the Enterprise Income Tax Treatment of Enterprise Re-organisations (关于企业重组业务企业所得税处理若干问题的通知), were promulgated by the Ministry of Finance (MoF) and the State Administration of Taxation (SAT) on April 30 2009. They apply retroactively to restructurings that occurred on or after January 1 2008 and mark a milestone in the development of the China tax landscape. Aside from bridging the tax treatments of corporate restructuring to the new PRC Enterprise Income Tax Law (中华人民共和国企业所得税法) and its Implementation Regulations (中华人民共和国企业所得税法实施条例), the Rules also closely align the tax concepts to international practices. This creates consistency and flexibility for both domestic and foreign enterprises.
Several key concepts introduced under the new Rules form the basis for restructuring in China.
(1) Various forms of restructuring
Under the Rules, the...
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