钨及钨制品、锑及锑制品出口经营管理暂行办法

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Interpretation of Circular No.698

Jian Sun


Background

　In accordance with provisions of the new Law of Enterprise Income Tax (2008) and Implementing Regulations (2008), whether the income from equity investment asset transfer is derived from PRC shall be classified by the domicile of the invested enterprise, so as to decide whether should pay the income tax in PRC jurisdiction. Whereas, the State Administration of Taxation of PRC (SAT) has not clearly addressed the condition that whether the income from foreign enterprises’ transfer of Chinese domestic enterprises shares they indirectly held by the transfer of offshore holding companies falls into Chinese jurisdiction or should pay income tax in PRC.

The promulgation of Circular No.698 Guoshuihan 2009

　On December 10, 2009, the State Administration of Taxation (SAT) promulgated the Circular on Regarding Strengthening the Administration of Income Tax of Sale of Shares by Non-Resident Enterprises, (Guoshuihan [2009] 698) .

　Provisions in Circular No.698 clearly addresses that prevent the foreign enterprises from evading income tax obligation by indirect transfer of shares of Chinese resident enterprises through arrangements like abusing the corporate governance.

　In accordance with the provisions in Circular No.698, foreign investor whose indirect transfer of Chinese residence enterprises falling into the following two catalogues:

(1) The real tax burden rate of the jurisdiction where the offshore holding company transferred is incorporated is less than 12.5%; or

(2) The jurisdiction where the offshore holding company transferred is incorporated does not acquire income tax from foreign-sourced income.

　shall submit the relevant documents as below to the local taxation bureau where the Chinese domestic enterprises being transferred located within 30 days after the execution of Share Transfer Agreement to prove the aforesaid indirect share transfer is for reasonable commercial purpose.

(1) Share Transfer Contract or Agreement.

(2) The relationship between Foreign Investors and Offshore Holding Companies transferred by Foreign Investors regarding finance, operation, purchase and sale, etc;

(3) The situation of the operation, personnel, finance, property of the offshore holding companies transferred by foreign investors;

(4) The relationship of the offshore holding companies transferred by foreign investors and Chinese domestic enterprises regarding finance, operation, purchase and sale, etc.

(5) The Explanations of reasonable commercial objectives of establishment of offshore holding companies by foreign investors.

(6)Other relevant documents required by Taxation Authorities.

　Where administrating tax authorities, upon review and examination of the documents submitted by foreign investors, deem such offshore holding company to be a vehicle incorporated for the purpose of tax evasion, it has the power to re-classify the share transfer transaction in according to the nature of economies, deny the existence of offshore holding company and impose 10% income tax to the transfer of shares after the examination by the State Administration of Taxation.

　In the second place, when non-resident enterprises transfer Chinese resident enterprises to affiliated parties in the unfair price compared to the fair and independent transaction to reduce the taxable income, tax authorities have the power to adjust the income by proper methods.

　In the third place, provisions contained in Circular 698, share transfer income refers to difference between share transfer price and share cost. Share transfer price includes all sum received by share transfer assignors. In the event of invested enterprises have non-allocated profit or various funds after tax profit drawing, the invested enterprises shall not deduct aforesaid income sum from share transfer price. Cost of shares refers to real contribution sum paid by share transfer assignor to Chinese domestic company, or transfer sum paid to original assignors in the time when assignors purchased these shares.

Influence to the Oversea IPO’s and M&A

　As the Circular 698 enforced from January 1, 2008, non-resident enterprises shall review the transfer situation of Chinese domestic enterprises to decide the next step whether to calculate and submit the Enterprise Income Tax (direct transfer) or to submit the relevant document to Local Tax Authorities in the place where Chinese domestic enterprises located (indirect transfer).


国税函 2009（698）号解读
Interpretation of Circular No.698

发布背景
国家税务总局


国家税务总局关于颁发《地方税收法规规章、税收规范性文件备查备案规定》的通知

国税发[1994]208号


1994-9-20


各省、自治区、直辖市国家税务局，各计划单列市国家税务局，海洋石油税务管理局各分局：

　　现将《地方税收法规规章、税收规范性文件备查备案规定》发给你们，请认真贯彻执行。

　　附件：地方税收法规规章、税收规范性文件备查备案规定

　　第一条　根据国务院发布的《法规、规章备案规定》的有关精神，特制定本规定。

　　第二条　本规定所称地方税收法规是指由省、自治区、直辖市和省会城市以及国务院批准的较大的市的人民代表大会及其常务委员会制定的涉及税收的法规。

　　本规定所称地方税收规章是指由省、自治区、直辖市和省会城市以及国务院批准的较大的市的人民政府制定的涉及税收的规章。

　　本规定所称税收规范性文件是指由各省、自治区、直辖市、计划单列市国家税务局、地方税务局单独或者与其他部门联合制定的，在本辖区内具有普遍约束力的解释、规定、办法等。

　　第三条　下列文件不适用本规定：（一）税务机关内部的具体工作制度、规定、文件；（二）对具体事项的布告、公告以及行政处理决定；（三）原文转发上级税务机关或者上级税务机关与其他部门联合制定的规范性文件；（四）有关计划财务、供应指标的分配、各种报表的填报、税源调查等文件；（五）宣传、教育、监察、人事方面的文件。

　　第四条　地方税收法规、规章由省、自治区、直辖市、计划单列市地方税务局负责报送国家税务总局备查。

　　地（市）、县级地方人大、地方政府制定的，在本辖区内具有普遍约束力的涉及税收的解释、规定、办法等，由本级地方税务局报送省级税务机关备查。

　　第五条　省、自治区、直辖市、计划单列市国家税务局、地方税务局制定的符合第二条第三款规定的税收规范性文件，均应报国家税务总局备案。

　　地（市）、县级税务机关制定的，在本辖区内具有普遍约束力的规定、办法、通知等，均应报送省级税务机关备案。

　　第六条　地方税收法规、规章应当在接到之日起五日内、税收规范性文件应当于发布之日起五日内，一式两份报送国家税务总局政策法规司备案。

　　第七条　国家税务总局对备查的地方税收法规、规章，发现有下列问题者，提出处理意见，上报国务院审批：（一）与法律、行政法规相抵触的；（二）变更了法律、行政法规适用范围的；（三）变更税目、税率的。

　　第八条　国家税务总局对备案的税收规范性文件，就下列几个方面进行审查：（一）是否同法律、行政法规、税收规章相抵触；（二）是否变更了法津、行政法规、税收规章的适用范围；（三）是否超越权限，变更税目、税率；（四）是否符合程序及规范化要求。

　　第九条　国家税务总局在对备查、备案的文件进行审查时，报送文件的税务机关应当予以协助，并如实提供有关情况，或者在限期内答复查询意见。

　　第十条　对税收规范性文件，经审查发现的问题，由国家税务总局提出处理意见，并通知原报送机关处理。

　　原报送机关在接到有关的处理意见30日内，应将处理结果报告国家税务总局。

　　第十一条　省级以下税务机关对报送备查、备案的材料，在审查过程中发现的问题，由审查机关商请发文机关解决，并将结果上报国家税务总局。

　　发现超越权限，自定章法的，应及时报告国家税务总局。

　　第十二条　国家税务总局对备查、备案工作定期组织检查。

　　对于不报送或者不按时报送备查、备案者，国家税务总局通知其限期改正。

　　第十三条　省、自治区、直辖市、计划单列市国家税务局、地方税务局，每年应就本辖区的备查、备案情况向国家税务总局提交报告，并于每年1月底前将报告和上年所制定的规范性文件的目录报国家税务总局。

　　第十四条　省、自治区、直辖市、计划单列市国家税务局、地方税务局应根据本规定，结合本地区的实际情况，制定实施办法。

　　第十五条　本规定由国家税务总局负责解释，国家税务总局政策法规司负责备查、备案工作。

　　第十六条　本规定自颁发之日起施行。