Authored by: Ye Yongqing (Bill) , Yu Yue (Jessie) , Jun Kang and Ding Ying

China is one of a few tax jurisdictions that tax offshore indirect transfers (“OITs”). Under China’s Corporate Income Tax Law (“CIT Law”) and relevant regulations, an OIT refers to a transaction where (i) a non-resident enterprise (including corporations and partnerships) disposes of shares or similar rights of another non-resident enterprise who holds directly or indirectly some taxable assets (as defined below) in China, and (ii) the transaction produces an outcome that is substantively identical or similar to a direct transfer of the taxable assets. An OIT includes a reorganization that results in the change of ownership of an offshore shareholder.

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