Tax Treatment of Capital Reductions: Part I Formal Capital Reductions

August 05, 2024 | BY

Susan Mok

The amended PRC Company Law will have many, far-reaching effects, including motivating companies to reduce their registered capital in order to optimize capital utilization. Daisy Duan, Yingjie Yang and Cuishi Li of King & Wood Mallesons introduce the motivations and tax implications associated with one possible route: formal capital reductions

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Summary

  • Capital reductions can be categorized in various ways, and tax implications and accounting treatments vary accordingly and should be carefully considered
  • Formal Capital Reductions do not lead to a