Interpretation of Circular No.698
Jian Sun
Background
In accordance with provisions of the new Law of Enterprise Income Tax (2008) and Implementing Regulations (2008), whether the income from equity investment asset transfer is derived from PRC shall be classified by the domicile of the invested enterprise, so as to decide whether should pay the income tax in PRC jurisdiction. Whereas, the State Administration of Taxation of PRC (SAT) has not clearly addressed the condition that whether the income from foreign enterprises’ transfer of Chinese domestic enterprises shares they indirectly held by the transfer of offshore holding companies falls into Chinese jurisdiction or should pay income tax in PRC.
The promulgation of Circular No.698 Guoshuihan 2009
On December 10, 2009, the State Administration of Taxation (SAT) promulgated the Circular on Regarding Strengthening the Administration of Income Tax of Sale of Shares by Non-Resident Enterprises, (Guoshuihan [2009] 698) .
Provisions in Circular No.698 clearly addresses that prevent the foreign enterprises from evading income tax obligation by indirect transfer of shares of Chinese resident enterprises through arrangements like abusing the corporate governance.
In accordance with the provisions in Circular No.698, foreign investor whose indirect transfer of Chinese residence enterprises falling into the following two catalogues:
(1) The real tax burden rate of the jurisdiction where the offshore holding company transferred is incorporated is less than 12.5%; or
(2) The jurisdiction where the offshore holding company transferred is incorporated does not acquire income tax from foreign-sourced income.
shall submit the relevant documents as below to the local taxation bureau where the Chinese domestic enterprises being transferred located within 30 days after the execution of Share Transfer Agreement to prove the aforesaid indirect share transfer is for reasonable commercial purpose.
(1) Share Transfer Contract or Agreement.
(2) The relationship between Foreign Investors and Offshore Holding Companies transferred by Foreign Investors regarding finance, operation, purchase and sale, etc;
(3) The situation of the operation, personnel, finance, property of the offshore holding companies transferred by foreign investors;
(4) The relationship of the offshore holding companies transferred by foreign investors and Chinese domestic enterprises regarding finance, operation, purchase and sale, etc.
(5) The Explanations of reasonable commercial objectives of establishment of offshore holding companies by foreign investors.
(6)Other relevant documents required by Taxation Authorities.
Where administrating tax authorities, upon review and examination of the documents submitted by foreign investors, deem such offshore holding company to be a vehicle incorporated for the purpose of tax evasion, it has the power to re-classify the share transfer transaction in according to the nature of economies, deny the existence of offshore holding company and impose 10% income tax to the transfer of shares after the examination by the State Administration of Taxation.
In the second place, when non-resident enterprises transfer Chinese resident enterprises to affiliated parties in the unfair price compared to the fair and independent transaction to reduce the taxable income, tax authorities have the power to adjust the income by proper methods.
In the third place, provisions contained in Circular 698, share transfer income refers to difference between share transfer price and share cost. Share transfer price includes all sum received by share transfer assignors. In the event of invested enterprises have non-allocated profit or various funds after tax profit drawing, the invested enterprises shall not deduct aforesaid income sum from share transfer price. Cost of shares refers to real contribution sum paid by share transfer assignor to Chinese domestic company, or transfer sum paid to original assignors in the time when assignors purchased these shares.
Influence to the Oversea IPO’s and M&A
As the Circular 698 enforced from January 1, 2008, non-resident enterprises shall review the transfer situation of Chinese domestic enterprises to decide the next step whether to calculate and submit the Enterprise Income Tax (direct transfer) or to submit the relevant document to Local Tax Authorities in the place where Chinese domestic enterprises located (indirect transfer).
国税函 2009（698）号解读
Interpretation of Circular No.698
发布背景
玉林市加快住房分配货币化实施细则
广西玉林市人民政府
玉林市人民政府文件
玉政发[2000]50号
玉林市人民政府关于印发玉林市加快住房分配货币化实施细则的通知
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二０００年十二月二十二日
玉林市加快住房分配货币化实施细则
第一条 《玉林市住房补贴暂行办法》(玉政发[1999]46号)已于1999年8月9日颁布。为贯彻好玉政发[1999]46号文件，加快我市住房分配货币化进程，制定本实施细则。
第二条 各单位都要严格执行“从1998年12月31日开始，全市停止住房实物分配，逐步实行住房分配货币化”的规定，不得再用单位住房建设资金以单位名义进行住房建设（除廉租房外），然后将新建住房继续进行实物分配，也不得以高于经济适用住房价格购进商品房，然后以实物形式分配给职工个人，或按房改成本价出售给职工个人。
任何单位不得新征土地集资建房。即使是单位原有的空置土地，如果不符合城市规划，也不得集资建房。
第三条 必须严格执行住房补贴的申报、审批制度。
（一）申报单位要提交书面申请报告一式两份。报告主要内容包括：1、 单位性质：属于行政单位还是事业单位，是全额预算单位，或是差额预算单位，或是自收自支单位；2、单位总人数，其中：符合补贴人数， 不符合补贴人数，是否存在超编；3、补贴总额；4、补贴资金来源，其中住房资金、自有资金各多少？是否需财政补贴。
（二）职工个人如实填写好《职工住房补贴申请表》。
（三）职工所在单位及职工配偶所在单位对《职工住房补贴申请表》进行严格的审核，并填写好审核意见。
（四）职工所在单位分类填写好《无房户职工住房补贴、工龄补贴计算表》、《购买公有住房面积未达标准职工住房补贴、工龄补贴计算表》、《职工自建住房（购买商品房）工龄补贴计算表》、《职工全额集资建房工龄补贴计算表》、《住房补贴审批表》等，同《职工住房申请表》报主管部门审核，主管部门审核后再报房改办进行审核。职工住房补贴额、工龄补贴额计算出来在报主管部门审核前，要在单位内列榜公布，首先让群众进行审核。
（五）上述表格经房改办审核后,属中直、 区直单位的再报上一级主管部门审核批准,属市直单位的报市财政局(县(市)区直单位报县(市)区财政局)审核批准。
第四条 努力拓宽住房补贴资金来源渠道。一是转化原有的住房建设资金，财政或单位每年安排用于职工住房建设的资金转化为住房补贴资金；二是把售房款转化为住房补贴资金。各单位的售房款按20% 的比例提留出来作为住房维修基金后，其余部分可用于住房补贴；三是单位住房资金的增值部分，职工在集资建房中缴交的征地拆迁补偿费部分；四是经财政部门核定可在成本、费用中列支的一部分；五是有预算外资金收入的单位，从预算外资金收入中列支。
第五条 确定职工住房补贴额后，如果单位不能筹集足额住房补贴资金，可按先无房户职工，后离退休职工，已购公有住房未达面积标准职工、全额集资建房职工、自建私房（自购商品房）职工的顺序发放。
第六条 严格住房补贴资金的管理。住房补贴（包括工龄补贴）资金要存入住房资金管理中心的住房补贴资金专户，按住房公积金管理办法管理，在职工购建住房时领取。离退休职工的住房补贴可直接发放给其个人。
第七条 在核发住房补贴和工龄补贴时，除严格执行玉政发[1999]46号文件所确定的原则外，对可能出现的一些问题作如下处理：
（一）老干部离休后，已按桂发[1983]51号文及当地有关文件领取了安置费或建房费的，不再享受住房补贴和工龄补贴。
（二）职工离退休后，通过行政划拨方式获得宅基地，不再享受住房补贴。
（三）老干部离休后，已按桂发[1983]51号文及当地有关文件规定领取房屋维修扩建费（建房补助费）的，不再享受住房补贴，但可享受工龄补贴，其实际领取的工龄补贴应扣除已领取的房屋维修扩建费（建房补助费）加上银行存款利率和物价增长指数等因素增加的部分（其中银行存款利率按年利率3.15%、物价增长指数按3%确定）。
（四）1998年12月31日（含12月31日）前去世的职工（含离退休职工），不再享受住房补贴；1992年12月31日前去世的职工，不再享受工龄补贴。
（五）职工集资建房属全额集资的（即包括征地和拆迁补偿费在内的建房所有实际费用均由集资者个人出资），可以享受工龄补贴，但不得享受住房补贴。职工集资建房时单位给予了适当补贴（即在玉地发[1994]18号文规定的补贴范围内补贴）的，职工既不得享受住房补贴，也不得享受工龄补贴。
（六）职工已购公有住房的建筑面积，房改办按房改政策进行核定计算，房产管理局按房屋产权的有关规定核定计算，两种核定计算出来的住房面积有一定差别，在核定职工按房改优惠政策购买公有住房面积时，以房改办核定计算的住房面积为准。
（七）夫妇双方是不同级别职工，按照各人享受的住房面积标准，已购公有住房有一方未达标，有一方又已超标，现在核发住房补贴时，未达标方仍可按已购公有住房未达规定标准面积的规定核发住房补贴和工龄补贴，超标一方不再享受住房补贴和工龄补贴，但所购住房对超标一方不能按超标住房处理。
（八）职工住房面积标准自治区作了统一规定，每一级别的职工住房面积标准有最低下限和最高上限，在核发住房补贴时，各单位采用的标准由各单位视自己的经济承受能力在上下限范围内确定，一个单位同一级别职工只能采用一个标准。
（九）职工已购住房属部分产权的，可按职工已购住房面积（即该住房的建筑面积，不是职工拥有部分产权的面积）与其应享受住房面积标准差额进行计算其可享受的住房补贴和工龄补贴，但在该职工所购部分产权住房未过度为全产权时，不能核发该职工的住房补贴和工龄补贴。
（十）职工购了公有住房，又违规在配偶方参加集资建房，即使所购住房未达规定住房面积标准，也不能核发其住房补贴和工龄补贴，只有退出已购公有住房或退出集资所建住房，才能按集资建房或购买公有住房的相关规定核发住房补贴和工龄补贴。
第八条 加强对单位住房资金（售房款）的管理。为了保证住房分配货币的顺利进行，落实住房补贴资金来源，住房资金管理机构对住房资金要严格按照规定进行管理。单位的售房款不得再回拨单位用于公有住房建设，也不得用于已售公有住房的装修。对用于已售公有住房公用部份的维修费用要从严掌握，最高额度不得超过售房款的20%。
第九条 本实施细则由玉林市住房制度改革委员会办公室负责解释。
第十条 本细则自发布之日起施行。
