Worries red chips: For income tax law the anti-avoidance rules.

<P> The new Enterprise Income Tax Law to implement the relevant provisions of the anti-avoidance rules have been close to "labor", private enterprises listed overseas will face the test of controlled foreign company provisions. .A source said yesterday, the enterprise income tax law on special tax adjustments related to the implementation details, has entered the final stage of comment, is expected to be issued around mid-April. .These people said, from the implementation details of special tax adjustments of the draft of view, is a mixed blessing for businesses, foreign-listed red-chip private businesses are more worried about one of the controlled foreign company (CFC) anti-avoidance provisions. .</ P> <P> red chips in fear </ P> <P> http:// hearing, according to the controlled foreign companies (CFC) refers to the resident enterprise, or by resident enterprises and Chinese residents in the control of the establishment of the actual tax .tax rate lower than 25% negative 50% of countries (regions), for reasonable business needs of non-profits are not distributed or reduce the allocation of foreign enterprises. .Enterprise Income Tax Law in accordance with the provisions, CFC profits belonged to the part of the resident enterprise shall be included in the current income of the resident enterprises. .Informed sources said that the relatively new CFC rules, many overseas-listed enterprises, especially private enterprises more concerned about the red chips. .These enterprises had set up to facilitate the overseas listing of a special purpose company (SPV), in accordance with the provisions of the anti-avoidance rules, these companies are likely to fall into the scope of supervision of the CFC provisions. ."For example, the United States, Huang Guangyu of Gome not hold shares directly, but through holding companies registered in the Cayman shares and other shares in a special purpose company, through a special purpose company held two shares of listed companies in Hong Kong .If the strict implementation of the provisions of CFC, Huang SPV are held by the two fall into this clause within the jurisdiction. "informed sources said. .The source said, according to the current draft, was identified as CFC must also have a few conditions: where the actual tax burden is lower than 50% of the domestic tax burden, a single foreign company holding shares in more than 10%, a reasonable business needs for non- .no distribution of profits or reduce distribution. .He also said that red-chip China Mobile will also be included in terms of the jurisdiction of the CFC. .But the red-chip companies can often avoid the CFC through to the final terms of a jurisdiction. .</ P> <P> association found to lower the threshold </ P> <P> for the identification of association standards, the rules reduce the threshold for comment. .Earlier in the relevant documents, among one of the parties directly or indirectly holds 25% shares or more, and with a third party, directly or indirectly holds more than 25% shares of companies were identified as having the relationship, and this .times this standard reduced to 20%. ."So many companies this ratio will be determined to be 24% more, walking a fine line, the pocket may come all at once." The source said. .Enterprise Income Tax Law in accordance with the provisions of the related party transactions related enterprises, will be included in the investigation and transfer pricing adjustment range. .Transfer pricing, compared with the tax laws and implementing regulations, anti-avoidance rules do not break too much. .Pricing in the reservation, then set the conditions for application: related party transactions over 100 million yuan, the actual operating period of more than 10 years, no major tax evasion problem and fulfill its reporting and preparation of related information stored over the same period. .APA is between tax authorities and taxpayers through the signing of an agreement or arrangement in the form of taxpayers in the next period of time and the pricing of related party transactions and other matters related to the profit level set of criteria agreed in advance to address the complex cross-border related party transactions .transfer pricing issues. .It is understood, the tax on the APA regulators more cautious attitude, "After all, the APA is an arrangement in future, if a business does not know the circumstances hastily signed the APA, it may lead to the state's financial interests .loss of face. 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