Non-residents need to be careful when transferring holdings with an indirect ownership in Chinese companies as the Chinese tax authorities are more actively seeking to tax such transactions.
In a case recently published by China's State Administration of Taxation, a subsidiary of a Japanese company established in the British Virgin Islands (BVI) sold a 49% stake in another BVI company for $550 million resulting in a capital gain of $50 million. At the time of the sale, the company sold had w…