Extraterritorial enforcement of corporate income tax
| BY
clpstaff &clp articlesA tax circular which seeks to strengthen the administration of tax on income derived from equity transfer may have a profound impact on non-resident investors using offshore vehicles. But the authorities have some legal hurdles to clear
Under the current Implementing Regulations for the PRC Enterprise Income Tax Law (中华人民共和国企业所得税法实施条例 ) , effective from January 1 2008, a general anti-avoidance rule (GAAR) was introduced such that arrangements without “reasonable commercial purpose” causing a reduction of taxable gross income will be adjusted. The detailed Implementation Regulations went on further to define this “reasonable commercial purpose” as any arrangement for the primary purpose of the reduction, exemption or deferral of Enterprise Income Tax (EIT) payments.
In the past two years, the State Administration of Taxation (SAT) has issued a number of circulars imposing various tax administrative measures and policies on non-tax-resident enterprises (Non-TRE) with China investments (see Figure 1).
This premium content is reserved for
China Law & Practice Subscribers.
A Premium Subscription Provides:
- A database of over 3,000 essential documents including key PRC legislation translated into English
- A choice of newsletters to alert you to changes affecting your business including sector specific updates
- Premium access to the mobile optimized site for timely analysis that guides you through China's ever-changing business environment
Already a subscriber? Log In Now