Last year, the revenue department allowed individuals and partnerships to enjoy a tax-free swap of business assets to a company, and reduced the transfer fee for immovable property to 0.1% of the government’s appraisal value. Many businesses proceeded with restructuring under this scheme, changing from either an individual or an ordinary partnership to a corporate entity. This allowed the business to pay tax at a flat rate of 20% of its net profit, and 10% of its profit sharing or dividend distributed to each shareholder, thereby reducing the effective tax rate to 28%.
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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 emailing Danian Zhang at email@example.com.