What kind of tax would be applicable if a foreign invested company locates in China transfers its equity in a company to another investor?
If A company is a wholly foreign owned enterprises locates in Shanghai and has contributed USD 1 million to joint venture B, and then A company transfers USD 1 million in joint venture B to C company at USD 2 million, then 5% business tax and 33% income tax should apply. The capital gains that A company would receive from the sale of shares in B company to C company would be treated as part of A company's taxable income for enterprise income tax purposes.
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