Tax Issues Relevant to Engagement in the Business of Financial Asset Disposal by Foreign-invested Enterprises and Foreign Enterprises Circular
国家税务总局关于外商投资企业和外国企业从事金融资产处置业务有关税收问题的通知
Foreign enterprises in the PRC are required to pay value-added tax, business tax and enterprise income tax on the revenue from disposing Chinese financial assets.
(Issued by the State Administration of Taxation on January 7 2003.)
（国家税务总局于二零零三年一月七日发布。)
Offices of the State Administration of Taxation and Local Taxation Bureaux of all provinces, autonomous regions, municipalities directly under the central government and cities with independent development plans:
Pursuant to the relevant provisions of the PRC Foreign-invested Enterprise and Foreign Enterprise Income Tax Law and its implementing rules and the PRC Business Tax Tentative Regulations and their implementing rules, we inform you, as follows, on issues relevant to the tax treatment of engagement in the business of Chinese financial asset disposal by foreign-invested enterprises and foreign enterprises:
各省、自治区、直辖市和计划单列市国家税务局、地方税务局：
1. Foreign-invested enterprises and foreign enterprises (Enterprises) shall submit value-added tax, business tax and enterprise income tax returns on the revenue from their engagement in the business of disposing of Chinese financial assets, and shall pay the said taxes, in accordance with tax laws and this Circular.
2. The term "business of disposing of financial assets" means an Enterprise's acquisition of equity, claims, physical assets or the entire assets (comprising a combination of the aforementioned assets) of another enterprise in China (Replacement Assets) from a financial asset management company in China (such acquisition being achieved by means of purchase of such assets; by means of receiving an injection of such assets in exchange for equity; or by other means), followed by the disposal of such Replacement Assets by way of assignment, recovery, replacement or sale, etc. and the obtaining of corresponding remuneration therefor.
根据《中华人民共和国外商投资企业和外国企业所得税法》及其实施细则、《中华人民共和国营业税暂行条例》及其实施细则的有关规定，现对外商投资企业和外国企业从事我国金融资产处置业务有关税务处理问题，通知如下：
An Enterprise may dispose of financial assets by any of the following methods:
(1) recovering or assigning claims;
一、外商投资企业和外国企业（以下简称企业）从事我国金融资产处置业务所取得的收入，应按税法及本通知的有关规定申报缴纳增值税、营业税和企业所得税。
(2) swapping its claims for equity;
(3) disposing of physical assets the disposal rights in which are owned by the Enterprise;
二、金融资产处置业务是指企业通过购买、吸收入股等方式，从我国境内金融资产管理公司取得我国境内其他企业的股权、债权、实物资产以及由上述资产组合的整体资产（以下简称重置资产），再将上述重置资产进行转让、收回、置换和出售等形式的处置，并取得相应的回报。
(4) selling or assigning equity holdings;
企业处置金融资产包括以下方式：
(5) returning Replacement Assets; or
(6) disposing of Replacement Assets by other means.
（一）企业收回或转让债权；
3. When an Enterprise obtains Replacement Assets, the price actually paid at the time of purchase thereof, or the value appraised at the time of injection thereof in exchange for equity, shall be the original value. The classification of Replacement Assets shall depend on the subject matter of evaluation at the time the assets were obtained. The said subject matter may be a single asset in the form of an individually evaluated equity holding in, claim against or physical asset of an enterprise, or be a bundle of several assets evaluated collectively.
If an enterprise reclassifies or rebundles some or all of the Replacement Assets it has acquired, it may determine the original value of a single Replacement Asset or a bundle of Replacement Assets on the basis of the reclassification or rebundling, provided that the original value of the reclassified or rebundled Replacement Asset(s) does/do not exceed the original value of the Replacement Asset(s) at the time they were acquired by the enterprise.
（二）企业所持有的债权转为股权；
4. Business tax and value-added tax on Replacement Assets disposed of by an Enterprise shall be levied or exempted in accordance with the following provisions:
(1) business tax shall not be levied on the disposal of Replacement Assets that were in the form of claims;
（三）企业处置拥有支配权的实物资产；
(2) revenue derived from the disposal of Replacement Assets that were in the form of equity (including disposals by way of debt for equity swaps) shall not be subject to business tax;
(3) revenue derived from the disposal of physical Replacement Assets owned by the Enterprise shall be subject to business tax if such assets are immovables; if such assets are goods, the revenue shall be subject to value-added tax in accordance with the Value-added Tax Regulations and relevant provisions.
（四）企业所持有的股权出售或转让；
5. Enterprise income tax shall be calculated and paid on the net gain derived by an Enterprise from the disposal of Replacement Assets, the net gain being the revenue derived less the original value of, expenses related to, and loss in respect of the assets.
If an Enterprise disposes of Replacement Assets in stages or in batches, once the revenue it derives from the disposal of the assets exceeds the original value of the relevant single Replacement Asset or the bundled Replacement Assets, it shall enter that portion exceeding the original value as taxable income for that period and calculate and pay enterprise income tax thereon.
（五）企业重置资产的退回；
A loss incurred by an Enterprise in disposing of a single Replacement Asset or a bundle of Replacement Assets may be deducted from the Enterprise's taxable income for the relevant period. A loss on bundled assets may only be calculated after the entire bundle has been completely disposed of.
6. A foreign enterprise with no establishment or site in China shall file returns and pay its taxes itself or cause them to be filed and paid by an agent in China appointed by it. It may opt to pay its payable enterprise income tax in the place where the enterprise to which a Replacement Asset belongs is located. The place of payment of its payable business tax or value-added tax shall be determined in accordance with relevant provisions.
clp reference:3210/03.01.07promulgated:2003-03-01（六）其他方式处置重置资产。
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