Corporate restructuring is an important business decision, and the tax implications arising from the restructuring could have significant impact on such decision. Specifically, tax risks and tax cost base are issues that must be considered and addressed prior to implementing a corporate restructuring. Complex restructuring transaction may involve various types of taxes and Corporate Income Tax (CIT) is undoubtedly the most common and an important tax that requires taxpayer's attention.
The new CIT Law has set out the principles of the CIT treatment in respect of corporate restructuring; and the Ministry of Finance and State Administration of Taxation ("SAT") have, on 30 April 2009, jointly issued the "Circular on Several Issues on CIT Treatment of Corporate Restructuring Transactions" (Caishui [2009] No. 59, "Notice 59") which sets out guidance on the CIT treatment on corporate restructuring. This has provided useful and important guidelines for determining the CIT treatment of corporate restructuring. However, there are still areas which have not been addressed and clarified by Notice 59; and the tax regulatory framework concerning corporate restructuring is still far from being comprehensive, clear and complete. After approximately one year, the SAT has finally issued another notice, the "Measures for Administration on CIT of Corporate Restructuring" (Announcement of the SAT [2010] No. 4, "Notice 4") which aims to clarify and provide answers to many unaddressed/ uncertain issues left by Notice 59 in regard to CIT treatment of corporate restructuring transactions.
Therefore, it is imperative that taxpayers undertaking or planning to undertake corporate restructuring fully understand and keep abreast of the new tax regulations on corporate restructuring so as to ensure that appropriate tax treatment and tax planning are applied. Against this background, KPMG is pleased to host a seminar to help clients further understand the CIT treatment on corporate restructuring.