Earlier, the financial report of a group belonging to a well-known domestic social networking platform disclosed “547.9 million yuan in tax supplements”, which became a hot topic in the industry. The reporter learned that the Hong Kong intermediate holding company set up by the enterprise was denied the status of “beneficial owner” by the tax department because it did not meet the characteristics of substantive business activities. The preferential 5% dividend withholding tax rate of 5% of the “Mainland and Hong Kong Special Administrative Region Arrangement on Avoiding Double Taxation on Income and Preventing Tax Evasion” cannot be applied, and must be taxed at the 10% tax rate stipulated in domestic tax laws. To this end, the enterprise has already distributed dividends of 356.1 million yuan in supplementary tax, and an additional withholding income tax of 191.8 million yuan will be accrued before dividends are distributed. In response, a number of industry experts said that under the global anti-tax avoidance wave, the “formal compliance” cross-border tax avoidance model does not work, and the architecture design must match the actual commercial essence.

Earlier, the financial report of a group belonging to a well-known domestic social networking platform disclosed “547.9 million yuan in tax supplements”, which became a hot topic in the industry. The reporter learned that the Hong Kong intermediate holding company set up by the enterprise was denied the status of “beneficial owner” by the tax department because it did not meet the characteristics of substantive business activities. The preferential 5% dividend withholding tax rate of 5% of the “Mainland and Hong Kong Special Administrative Region Arrangement on Avoiding Double Taxation on Income and Preventing Tax Evasion” cannot be applied, and must be taxed at the 10% tax rate stipulated in domestic tax laws. To this end, the enterprise has already distributed dividends of 356.1 million yuan in supplementary tax, and an additional withholding income tax of 191.8 million yuan will be accrued before dividends are distributed. In response, a number of industry experts said that under the global anti-tax avoidance wave, the “formal compliance” cross-border tax avoidance model does not work, and the architecture design must match the actual commercial essence.