Chinese enterprises and individuals investing overseas, as well as foreign businesses with operations in China, need to consider measures in certain jurisdictions intended to address concerns about taxation and economic substance requirements.
A number of jurisdictions—for instance, the British Virgin Islands, the Cayman Islands, Bermuda, Guernsey, Jersey, and the Isle of Man—have recently enacted legislation requiring local entities conducting specified activities in these jurisdictions to have “adequate” economic substance. These changes are in response to recently established EU economic substance requirements and a parallel OECD standard on substantial activities requirements for jurisdictions identified as having no or only nominal taxation. Reviewing this global standard will be a key part of the OECD’s Forum on Harmful Tax Practices (FHTP) work plan for 2019.
Read a February 2019 report prepared by the KPMG member firm in China
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