Tax

The tax authority may proceed with an adjustment for any expenses paid to an overseas affiliate not in compliance with the arm's length principle.

China's State Administration of Taxation (SAT) recently issued a notice regarding payments involving related offshore parties. China has openly declared its plans to crackdown on tax evasion, so the issuing of new regulations come as no surprise

Inward investors have expressed concern about proposals that China will levy a 10% capital gains tax on profits earned by foreign investors, with no opportunity to deduct for losses. While some tax advisers welcomed the clarity, some funds may struggle to pay the higher-than-expected tax bills on gains earned over five years between 2009 and 2014

In a strong indication of its growing commitment to enforcing tax compliance, China's State Administration of Taxation released updated indirect transfer rules to replace Notice 698. professionals say the more stringent tax rules, which include safe harbour regulations, withholding tax obligations of the buyer, and clarifications of reasonable commercial purpose, are both welcome and concerning

After ten years, a regulatory framework has now been put in place for QFII and RQFII income tax. Investors must pay taxes for gains made before November 17 last year and should consult with authorities to verify calculation methods

QFIIs exempted from income tax related to Shanghai-Hong Kong Stock Connect.

Investors in Shanghai-Hong Kong Stock Connect exempted from income tax and business tax provisionally.

Cheng (Ron) Ma of Jingtian & Gongcheng highlights the developments in VAT and double taxation treaties,explains withholding tax and predicts the next phase of reforms

The merger process in China can be long and painful. This is primarily due to the lack of detailed implementing rules and un-reconciled discrepancies among governmental authorities