On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the Act), a sweeping bill with significant tax, energy and healthcare implications.[1] This alert focuses on two key corporate tax aspects of the Act:Continue Reading Key Corporate Tax Aspects of the New Inflation Reduction Act

By Carol Xu

China’s State Administration of Taxation (“SAT”) released Bulletin [2013] No. 19, “Announcement on Issues Concerning Levying Corporate Income Tax on Services Provided by Non-residents through Seconding Personnel to China”《关于非居民企业派遣人员在中国境内提供劳务征收企业所得税有关问题的公告》 (“Bulletin 19”) to provide guidance on the treatment of non-resident enterprises’ individual secondment arrangement from the PRC corporate income tax (“CIT”) perspective.Continue Reading China SAT Releases Bulletin on CIT Treatment of Non-resident Enterprises’ Secondment Arrangement

By Amin Amirkia

Earlier this month, China’s Ministry of Finance, State Administration for Industry and Commerce, Ministry of Commerce, State Administration of Foreign Exchange, and China Securities Regulatory Commission issued the Notice on Issuing the Scheme on the Localized Restructuring of Sino-Foreign Cooperative Accounting Firms (“Notice”), requiring the Big Four to “localize” their operations in China. The Notice became effective on May 10, 2012.Continue Reading Big Four to Localize in China

By Amin Amirkia

The “Big Four”, which dominate the Chinese market, are facing regulatory changes that could mean that only accountants with Chinese qualifications can be partners in their China-based audit practices.

At the time of China’s accession to the World Trade Organization in 2001, the Big Four successfully lobbied to have an exception to China’s requirement that only Chinese certified accountants could own Chinese accounting firms. As a result, the Big Four were allowed to maintain their foreign ownership in their existing joint ventures. However, the exception only applied to the Big Four’s existing joint ventures, which have 20 year terms. As a result, the joint venture agreements signed by KPMG, Deloitte & Touche, and Ernst & Young will expire later this year, with PricewaterhouseCoopers’ to expire in 2017.Continue Reading Regulatory Challenges for the “Big Four”

On March 28, 2011, China’s State Administration of Taxation (“SAT”) issued Announcement No. 24 regarding Several Problems of Regulation on Income Tax of Non-resident Enterprises (the “Announcement”), effective beginning April 1, 2011. The Announcement applies to all outstanding tax liabilities incurred but not paid before April 1, 2011.Continue Reading China Clarifies and Expands Reporting Obligations of Foreign Enterprises on Indirect Equity Transfers

Beginning December 1, 2010, foreign-invested enterprises, foreign enterprises, and foreign individuals are now required to pay the city maintenance and construction tax as well as the education surcharge, from which these entities and individuals were formerly exempt. Prior to this regulation, the PRC levied those taxes only on Chinese-owned and funded enterprises and Chinese citizens.Continue Reading China Ends an Era of Special Tax Treatments for Foreign Companies and Individuals

On March 22, 2010, the Ministry of Commerce, State Administration of Taxation, General Admission of Customs and the Ministry of Finance jointly issued a circular (Shangzifa [2010] No. 93, "Circular 93") to clarify procedures for the examination and approval of tax exemptions and refunds for purchase of equipment in China made by foreign-invested R&D centers.Continue Reading Four Departments Jointly Clarify Tax Rules For Purchase Of Equipment by R&D Centers

China’s State Council has recently released the amended Regulations for the Implementation of the Audit Law of the People’s Republic of China (hereafter, the “New Audit Regulation”) applicable starting May 1, 2010. Compared with the amended Audit Law of the People’s Republic of China (hereafter, the “New Audit Law”), the New Audit Regulation sets forth the power of auditing authorities more specifically.Continue Reading China Issues the New Audit Regulation


A merger involves two or more enterprises forming a single legal entity (either existing or new) through combining their assets and liabilities. In China, the two methods through which a merger can be transacted are the absorption of an existing company or the creation of a new entity. Though the former resembles an acquisition, different tax rules apply if the transaction is recognized as a merger.Continue Reading China M&A Tax Issues – Installment 3: Mergers and Special Purpose Vehicles

The M&A rules recognize a deal as either an ordinary reorganization or a special reorganization, and different tax treatments apply accordingly. In terms of acquisitions, the major difference in tax treatment between ordinary and special reorganizations is the tax basis used for calculating the gain/loss from the transaction and the time point at which this gain/loss is recognized. Furthermore, according to Article 7 of the M&A rules, an acquisition between a domestic Chinese enterprise and a foreign enterprise (which in this case includes those domiciled in Hong Kong, Macao, and Taiwan) must meet one of the additional conditions below in order to qualify as a special reorganization[1]:Continue Reading China M&A Tax Issues – Installment 2: Ordinary versus Special Reorganizations in Share Deals and Asset Deals

China’s new tax law went into effect in January of 2008. This development has had important effects on tax structures used by foreign investors doing mergers and acquisitions in China. It has influenced the strategies firms employ in pursuing “enterprise reorganization” projects involving domestic Chinese enterprises, including mergers, share acquisitions, and asset acquisitions among other transaction types. In April of 2009, China’s Ministry of Finance and State Administration of Taxation ("SAT") issued Caishui [2009] No. 59 (the "M&A Rules"). Some of the most significant aspects of these new rules are described below.Continue Reading China M&A Tax Issues – Installment I: Changes in Tax Rules