Guidance on tax-free corporate reorganization amended


The State Administration of Taxation (SAT) issued the Announcement on Several Issues concerning Collection and Administration of Enterprise Income Tax (EIT) on Enterprise Reorganization on 24 June, amending procedural guidance on tax-free corporate reorganizations. The standards apply to corporate reorganizations completed in or after 2015, as well as corporate reorganizations for which agreements have been signed but transactions have not yet been completed.


The general rule for corporate reorganizations is that gains and losses should be recognized when the corporate reorganization occurs.

A photo of Tax Time in artThe substantive tax treatment of corporate reorganizations has predominantly been governed by the Notice Regarding Several Issues in Enterprise Income Tax Treatment of Enterprise Reorganization, issued by the Ministry of Finance and SAT in 2009. Further, in 2010 the SAT issued the Administrative Measures for the Enterprise Income Tax of Enterprise Reorganizations, which clarifies and provides guidance on the procedural and filing requirements for corporate reorganizations. The announcement amends and replaces parts of the measures.

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Business Law Digest is compiled with the assistance of Baker & McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker & McKenzie by e-mailing Danian Zhang (Shanghai) at: