Ministry of Finance and State Administration of Taxation, Circular on Several Issues Concerning the Enterprise Income Tax Treatment of Enterprise Re-organisations

财政部、国家税务总局关于企业重组业务企业所得税处理若干问题的通知

June 06, 2009 | BY

clpstaff &clp articles &

Qualified M&A transactions allowed special income tax treatment.

Clp Reference: 3230/09.04.30 Promulgated: 2009-04-30 Effective: 2008-01-01

Issued: April 30 2009
Effective: January 1 2008

Main contents: When an enterprise re-organisation satisfies all of the following conditions, special tax treatment provisions shall apply:

(1) it is carried out for rational commercial objectives, and the principal objective thereof is not the reduction, exemption or deferment of taxes;

(2) the percentage of the assets or equity acquired, merged or divested complies with the percentage specified herein;

(3) the original substantive business activities for which the re-organisation assets are employed are not changed for 12 consecutive months following the enterprise re-organisation;

(4) the amount paid in the form of equity that forms part of the consideration for the re-organisation transaction complies with the percentage specified herein; and

(5) the original main shareholder(s) that obtained payment in the form of equity in the enterprise re-organisation may not transfer the equity so obtained for 12 consecutive months following the re-organisation (Article 5).

Related legislation: PRC Enterprise Income Tax Law, Mar 16 2007, CLP 2007 No.3 p.21; and Implementing Regulations for the PRC Enterprise Income Tax Law, Dec 6 2007, CLP 2008 No.1 p.21

clp reference:3230/09.04.30prc reference:财税 [2009] 59号promulgated:2009-04-30effective:2008-01-01

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