Case of Special Tax Treatment Concerning Corporate Income Tax

　　I. Applicant

　　B Company

　　II. Description of Matter

　　In an expected restructuring, A Company intends to acquire the equity interests of C Company and D Company held by B Company. The acquisition has a reasonable commercial purpose and is not primarily intended to reduce, waive taxes or defer the payment. B Company holds more than 50% stakes in both C Company and D Company. The consideration for the restructuring transaction will be 100% of A Company's equity, without cash payment. Finally, the acquirer will have controlled over the acquired company. Parties of the restructuring undertake to adopt the consistent tax treatment. The original substantive operating activities of the restructured assets shall not be changed within 12 consecutive months after the restructuring, and B Company shall not transfer the stakes it acquires within 12 consecutive months after the restructuring. B Company opined that the restructuring can apply the special tax treatment concerning corporate income tax. Due to the large amount involved, it filed an application for an advance tax ruling.

　　III. Ruling

　　Based on the information and statements provided by B Company, the tax authorities are of the view that the above restructuring meets the requirements for the special tax treatment concerning corporate income tax and therefore can apply the special tax treatment.

　　B Company is required to provide the relevant information to the tax authorities when submitting an annual corporate income tax return according to relevant policies about the special tax treatment and tax collection requirements. A company shall report to the tax authorities in a timely manner the changes in its production and operation business, nature, assets, equity structure and more during the restructuring or within the specified time after the restructuring that result in the disqualification for the special tax treatment.

　　IV. Basis for Ruling

　　1. Notice of the Ministry of Finance and the State Administration of Taxation on Certain Issues about the Treatment of Corporate Income Tax Concerning Enterprise Restructuring (Cai Shui [2009] No. 59);

　　2. Announcement of the State Administration of Taxation on Release of the Administrative Measures on Corporate Income Tax Concerning Enterprise Restructuring (SAT Announcement [2010] No. 4);

　　3. Notice of the Ministry of Finance and the State Administration of Taxation on Promoting Treatment of Corporate Income Tax Concerning Enterprise Restructuring (Cai Shui [2014] No. 109);

　　4. Announcement of the State Administration of Taxation on Certain Issues about Administration of Corporate Income Tax Collection Concerning Enterprise Restructuring (SAT Announcement [2015] No. 48).

　　V. Date of Ruling

　　March 2024

　　The ruling is binding on the tax authorities in respect of the application filed by the applicant.