China restates tax rules on offshore indirect transfers of PRC assets

The State Administration of Taxation has announced a set of principles which make important clarifications and supplements to Circular 698 – the main rule on the tax treatment of indirect transfers of PRC equity interests by non PRC residents.

We analyse the impact of the new announcement in the following areas:

  • the scope of Circular 698
  • the definition of the commercial purpose of a transaction
  • safe harbour rules for intra-group transactions
  • the obligations of parties to a transaction
  • additional information required by tax authorities

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