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Taxable capital gains may arise on withdrawal or reduction of capital

Taxable capital gains may arise on withdrawal or ...

China alert - Issue 22, July 2011

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Taxable capital gains may arise on withdrawal or reduction of capital

The State Administration of Taxation (SAT) issued the announcement [2010] No. 34 (Announcement 34) on 9 June 2011 to deal with, among other issues, the Corporate Income Tax (CIT) treatment of the withdrawal or reduction of capital. Basically, the proceeds derived by investors may be divided into (1) return of capital, (2) dividends and (3) capital gains. These components will have different CIT treatments. Announcement 34 takes effect from 1 July 2011.

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