Earnest Advisory

Assurance Based Consulting

Client’s situation:

Both company A and B are WFOE (wholly foreign owned enterprise) by the sole holding company. Company A is close to downtown with the business scope of “Trading”  Company B is in the economic zone of suburb with the business scope of “Manufacturing and R&D”.

Since Company A owns undistributed profit of RMB50M, it has to pay 10% WHT when repatriate the dividend to the shareholder. While at the same time, Company B was always in the loss position. The shareholders are facing serious question: what is the most proper way to save tax and use them for future development? 

We proposed solution:

  • Tax advisory, full use of tax break policy.
  • Provide full evidence to prove the restructure is for business purpose, not for tax purpose.
  • Full discussions with the tax officer in charge, even director of tax officers.


  • Proceed the special tax treatment on time
  • Smoothly transition during the restructure procedure
  • No extra tax burden happened.

Company Size: MNC/ Middle size/CNY400-500m annual income.

Industry: Air condition system, heating ventilation manufacturer

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