What are the Key Tax Issues to Consider When Foreign Investors Disposing of Investment in China?

July 24, 2023 | BY

Susan Mok

Tax is a key consideration when divesting a foreign investment, with a number of implications for a company's bottom line. Daisy Duan, Wang Yan and Chen Xiaohong of King & Wood Mallesons highlight the main impacts when exiting a Chinese investment

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Summary

  • There are a number of means by which a foreign investor can divest itself of a Chinese investment; each has different tax implications
  • No matter the means chosen, tax aspects should be a particular consideration for foreign investors
  • Key issues to take into account include ensuring fair market value prices are set, setting out a reasonable commercial purpose, and taking into account the cross-border position
  • In the longer-term, an eye should be kept on compliance reviews by the authorities