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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