SAT Clarifies Management of CIT on Business Restructuring

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Aug. 9 – The State Administration of Taxation recently issued a notice regarding the management of corporate income tax on business restructuring, effective January 1, 2010.

The notice, issued July 26, covers the scope of corporate business restructuring, including changes to the business’s legal form, debt restructuring, stock purchases, asset acquisitions and mergers, divisions, and other kinds of restructurings. The notice requires the parties of the same restructuring business to adopt the consistent principle for taxation treatment when it comes to dealing with general or special taxation issues.

The notice stipulates that when enterprises apply for liquidation, they should submit the following documents to the tax authorities: legal change of enterprise form which is approved by the State Administration of Industry and Commerce; asset appraisal report issued by relevant institutions; and ownership of debts.

Furthermore, the notice states that if the assets or equity of enterprises have fundamental restructurings that don’t meet the special tax treatment, the enterprises should notify the other party and the dominant party should notify the tax authorities within 30 days from when the restructuring occurs.

For more information on corporate income tax procedures in China, please contact Dezan Shira & Associates at