Clarifications on Corporate Tax Issues on Liquidation

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Jan. 4 – The State Administration of Taxation has issued a circular on issues related to corporate income tax (CIT) and company liquidation.

According to Circular 684, companies must immediately inform local tax authorities of the time they enter the liquidation period. Companies are to  consider the liquidation period as a separate tax year along with the corresponding liquidation income.

Liquidation returns shall be filed 15 days of the completion of the liquidation process. CIT liabilities must already be finalized in the same period and failure to do so will be meted by corresponding surcharges.

The circular did not indicate the application date although a safe guess would be a retroactive effect date of January 1, 2008 based on an earlier Circular 60 that specified the liquidation period as a separate tax year.

For more detailed advice on CIT issues, contact Dezan Shira & Associates National Tax Partner, Sabrina Zhang at