Under China’s New Company Law, taxes for companies and stakeholders change. Pay subscribed capital within 5 years. Interest deduction rules apply. Consult experts.
Understanding New Tax Implications Under China’s New Company Law
China’s New Company Law introduces new tax implications for companies and stakeholders. Shareholders of Limited Liability Companies (LLCs) must pay subscribed capital within five years, while interest expenses related to external loans are eligible for pre-tax deduction, subject to certain restrictions. It is crucial to consult legal and tax experts for risk management and strategic financial planning.
Strategies for Proactive Risk Management and Tax Planning
Companies, shareholders, and creditors are urged to consider the tax implications of capital commitments, equity transactions, and capital reductions under the New Company Law. Article 47 mandates LLC shareholders to meet subscription capital requirements within five years of establishment. To avoid penalties, businesses must adjust to the new contribution term and comply with pre-tax deduction regulations on interest expenses incurred from external borrowings.
Source link : May 2024 Monthly Tax Update for China by China Watch
