The Investment Attractiveness Evaluation
The Investment Attractiveness Evaluation
ACAMS Enterprise Membership provides to all relevant departments and personnel across your entire institution ACAMS member benefits including access to , which offers an extensive resource center , topical discussion forums and the ability to build an AML profile within the community; unlimited use of ACAMS and the ACAMS Webinar Subscription which allows you to participate in both upcoming and previously recorded web seminars. Pursuant to Paragraph 3, Article 3 of the PRC Enterprise Income Tax Law (EIT Law”), non-resident enterprises that have no establishments or places in China, or have establishments or places in China but the income derived by the enterprises has no actual connection with such establishments or places, shall be subject to EIT on the income sourced in China.White papers, guides, evals, events and news on the latest most strategically important technology solutions. It should be noted that if the value of the equity of an offshore enterprise being transferred is attributable to both China taxable assets and non-China taxable assets, the income derived from the transfer should be divided between the two types of assets based on reasonable methods, and only the portion attributable to China taxable assets shall be subject to EIT in accordance with Bulletin 7.After several rounds of revisions and consultations in the past few years, the State Administration of Taxation (SAT”) has recently promulgated the Bulletin on Several Issues concerning the Enterprise Income Tax (EIT”) on Indirect Asset Transfer by Non-Resident Enterprises (Bulletin 7”) 1 Tax matters occurred but have not been settled before 3 February 2015, the date of implementation of Bulletin 7, shall be governed by Bulletin 7. Meanwhile, the relevant provisions of Guo Shui Han 2009 No. 698 (Circular 698”) 2 and SAT Bulletin 2011 No. 24 (Bulletin 24”) 3 concerning indirect equity transfers shall be revoked accordingly. Based on our understanding, the logic behind this principle is that if a non-resident enterprise can be exempt from tax when it directly holds and transfers China taxable assets, it could prove to a certain extent that the investment structure and indirect transfer were not established or arranged for the avoidance of China tax, and thus the non-resident enterprise should not be subject to EIT for such indirect transfer.Enterprise has operated the LPG (propane and butane) Import and Export Terminal for over 30 years and has announced plans to further expand the export facility from a loading capacity of ~9 million barrels per month (MMBbls/mo”) up to 16 MMBbls/mo of LPGs in the fourth quarter of 2015. Shareholding percentage: the transferor holds or is held by the transferee or both parties are mutually held by another party, directly or indirectly 8 , for over 80% of the shares; if over 50% (exclusive) of the value of the equity of an offshore enterprise is, directly or indirectly, attributable to immovable properties in China, the above-mentioned 80% shareholding requirement shall be increased to 100%.Illinois public universities purchase goods and services from businesses in accordance with the Business Enterprise for Minorities, Females, and Persons with Disabilities Act, which went into effect August 28, 1994. However, as illustrated below, assuming that Company A is a Cayman company and Company D is a Hong Kong company, since (i) there is no double tax treaty between Cayman Islands and China, and (ii) under the double tax arrangement between mainland China and the Hong Kong SAR, if the Hong Kong company holds less than 25% of the shares of a Chinese resident enterprise (with its main assets not consisting of immovable properties), no EIT shall be levied on Company D for transferring such shares.
In this regard, Article 15 of Guo Shui Fa 2009 No.3 9 further provides that where both parties to an equity transfer transaction are non-resident enterprises and the transaction is carried out outside China, the non-resident enterprise receiving the transfer income or its agent shall be required to declare tax with the tax authority in charge of the Chinese resident enterprise whose equity is being transferred.In case of voluntary reporting, the required materials are relatively easy to obtain or prepare, including the equity transfer contract, equity investment structure, financial statements of the offshore enterprise and its offshore subsidiaries for the last two fiscal years and a statement elaborating on the reasonable commercial purposes of the transaction.Even though Bulletin 7 adopts a voluntary reporting principle, expanding the scope of reporting parties and encouraging the transferor and the withholding agent to report voluntarily, we are of the view that as compared with Circular 698, these measures would in fact cause the PRC tax authority to be more active in the tax administration on indirect transfer of China taxable assets and enable it to exert more effective and comprehensive control on the reporting of such transactions.The implementation of the Administrative Measures for General Anti-Avoidance Rules (Trial) and Bulletin 7, from both procedure and substance perspectives, shall render solid legal basis to the PRC tax authority for the investigations in respect of indirect transfer of China taxable assets and further strengthen its capability for anti-tax avoidance.Qualified intra-group reorganizations may gain benefit from the Safe Harbor” rules specified in Bulletin 7. Considering the facts and circumstances, the relevant enterprises should assess the tax implications of their restructuring plans, and if commercially feasible, make adjustments accordingly so as to meet the requirements set out in the Safe Harbor” rules.
Furthermore, Circular Caishui 2009 No. 109 14 , which was issued at the end of 2014, provides favorable special tax treatments for intra-group reorganizations by resident enterprises 15 Enterprises that have cross-border reorganization plans should take both Bulletin 7 and Circular Caishui 2009 No. 109 into account in order to evaluate their tax positions and optimize the restructuring schemes.However, in the absence of clear guidance rules, certain provisions, e.g. offshore enterprise and its subsidiaries which hold directly or indirectly China taxable assets…perform limited functions and assume limited risks which are not sufficient to prove their economic substance” may be difficult to implement in practice and hence cause disputes between the tax authority and enterprises.For an enterprise that plans to indirectly transfer its China taxable assets, we would suggest to assess the connection between the equity of the offshore enterprise being transferred and the functions performed and risks assumed by such an enterprise, analyze the economic importance of the enterprise in its group structure, and if feasible, enhance its economic substance, from such perspectives as equity structure, personnel, assets, income and financial information, etc.As compared with Circular 698, Bulletin 7 is more complex: the applicable scope of indirect transfer is expanded, the tax treatment is varied (by differentiating Green Harbor”, Red Harbor” and Grey Harbor”), the parties to an indirect transfer transaction face more options (voluntary reporting to avoid or mitigate penalty vs. non-reporting), the assessment of reasonable commercial purposes may be subjective and uncertain, etc.As a matter of fact, one might even argue that such attacks are a sign of success: it means the platform is now large enough for attackers to see value in targeting it. We cannot say for certain what the overall impact of Windows 10`s new patching strategy will be on the security of businesses that adopt it, and we won`t be able to assess the situation until some time after Windows 10 has established itself in the enterprise.