China tightens tax rules for foreign groups

Owners of Hong Kong-based companies with mainland assets will now face greater scrutiny and liability if they wish to sell them.

China has tightened its rules governing the sale of domestic assets by foreign entities in a two-pronged assault on tax avoidance and the overheating property market.

As a result of the changes, which took effect from February 3 but have only now been published, foreign groups owning assets in mainland China through Hong Kong-based companies will face more scrutiny and liability if they wish to sell those assets. 

The move, which could yet be applied retrospectively where a tax liability has not been settled, solidifies into regulation what was unofficial since 2009 but also expands it to include ownership of Chinese properties and property rights...

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