On 22 January 2014, the State Administration of Taxation (SAT) issued but did not publish Shui Zong Han notice [2014] No. 38, which approved the Zhejiang Provincial State Tax Bureau’s request to disregard the existence of a Delaware company in an indirect transfer. Notice No. 38 was only released to the public recently. With its newly published status, it becomes the third published reply from a state tax bureau addressing an indirect transfer.
According to notice No. 38, East Balt Inc (EBI), a US company incorporated in the state of Delaware, indirectly transferred its equity interest in East Balt Baker of Hangzhou (EB Hangzhou), a Chinese resident enterprise, through the direct transfer of its subsidiary, East Balt Baker of Hangzhou LLC (EBBH), an intermediate holding company also incorporated in Delaware, to a Dutch company, OEP East BaltBV.
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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: danian.zhang@bakermckenzie.com
