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Definition of Beneficial Owner under Entrusted Investments

Definition of Beneficial Owner under Entrusted In...

Private Equity Tax Express - Issue 2, May 2014  

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Definition of Beneficial Owner under Entrusted Investments

On 21 April 2014, the State Administration of Taxation (the “SAT”) released Announcement [2014] No.24 to clarify the definition of beneficial owner under “entrusted investments”. 

As a supplementary regulation to Guoshuihan [2009] No.601 and Announcement [2012] 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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