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China China Taxes Corporate Taxes China Tax Credits Policy to Foreign Investors' Direct Investment with Distributed Profits
KNOWLEDGE|
(1) |
The profits distributed to foreign investors refer to dividends, bonuses and other equity investment income formed by the retained earnings distributed by resident enterprises in China to investors.
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(2) |
Direct domestic reinvestments made by foreign investors with their distributed profits include equity investments such as capital increase, new establishment, and equity acquisition made by foreign investors, but do not include new additions, capital increases, or acquisitions of shares of listed companies (except for strategic investments that meet certain conditions). Specifically, it refers to:
(b) Investment in establishing new resident enterprises within the territory of China; (c) Acquisition of equity in resident enterprises within the territory of China from non-related parties. |
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(3) |
During the period of reinvestment by foreign investors within the territory of China, the industries engaged in by the invested enterprise fall within the national Catalogue of Industries Encouraged for Foreign Investment as listed in the Catalogue of Industries Encouraged for Foreign Investment.
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(4) |
Foreign investors who reinvest in the domestic project must continuously hold the reinvested equity for at least five years (60 months).
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(5) |
Where the profits of foreign investors used for direct investment within the territory of China are paid in cash, the relevant funds shall be directly transferred from the account of the profit-distributing enterprise to the account of the invested enterprise or the equity transferor. Before the direct investment, the funds shall not be circulated in other accounts at home and abroad. Where the profits of foreign investors used for direct investment within the territory of China are paid in non-cash forms such as physical assets or securities, the ownership of the relevant assets shall be directly transferred from the profit-distributing enterprise to the invested enterprise or the equity transferor. Before direct investment, they shall not be held on behalf of or temporarily held by other enterprises or individuals. |
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