Regulations Made about Reinvestment Tax Rebate for Foreign Investors in China
When investment enterprises or other companies and groups established by foreign investors specially for investment business in china are to be restructured, if a foreign investor who has enjoyed the privilege of reinvestment tax rebate transfers the reinvestment to another firm in the same group within the 5-year-period in accordance with related regulations, whether he, according to the 10th item of the Law of the People's Republic of China on Income Tax of Enterprises with Foreign Investment and Foreign Enterprises (LPRCITEFIEF), should hand in the tax rebate virtually gained by reinvestment.
To solve the problem, the State Administration of Taxation has made a definite regulation: in the restructuring of companies or groups for reasonable operation, the foreign investor (including the enterprise with foreign investment in which he holds 100% equity and engages in the investment business) transfers the reinvestment to related companies which he has direct or indirect ownership or is owned by himself after he enjoyed the privilege of reinvestment tax rebate in line with the related regulations, can be taken for that he didn't withdraw the reinvestment, and therefore, won't retrieve tax rebate he virtually gained by the reinvestment. Except the aforesaid, the foreign investor, who withdraws the reinvestment by means of transferring equity ownership, should, according to the 10th item of LPRCITEFIFE, pay back the tax rebate virtually gained through reinvestment.
In the restructuring of companies or groups for reasonable operation, the foreign investor (including the enterprise with foreign investment in which he holds 100% equity and engages in the investment business) transfers the reinvestment to related companies which he has direct or indirect ownership or is owned by himself after he enjoyed the privilege of reinvestment tax rebate in line with the related regulations, can be taken for that he didn't withdraw the reinvestment, and therefore, won't retrieve tax rebate he virtually gained by the reinvestment.
