Private Equity Tax Express - Issue 2, May 2014
On 21 April 2014, the State Administration of Taxation (the “SAT”) released Announcement  No.24 to clarify the definition of beneficial owner under “entrusted investments”.
As a supplementary regulation to Guoshuihan  No.601 and Announcement  No.30 issued by the SAT in 2009 and 2012 respectively, the issuance of the new circular provides more detailed guidance to local tax authorities on how to determine the beneficial owner when non-residents invest in the PRC via entrustment with single- or multiple-layer collective investment structure.
However, given that Announcement 24 does not provide clear guidance on which collective investment scheme will be in scope while sets very strict requirements on documentation submission requirements, it is likely cause many practical issues during the implementation of this circular.
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