On February 3, 2015, the PRC State Administration of Taxation (“SAT”) released the Announcement of SAT Concerning Several Matters Relating to Corporate Income Tax on Indirect Transfer of Properties by Non-tax Resident Enterprises, Announcement [2015] No. 7 “Announcement 7”). Below is a brief summary and discussion of the application of Announcement 7, which applies to indirect transfers of PRC entities or properties by offshore investors.

Announcement 7 is effective as of February 3, 2015 and largely replaces the previous guidance in the Circular of SAT on Strengthening the Administration of Corporate Income Tax on Incomes from Equity Transfers of Non-Resident Enterprises [2009]698?; “Circular 698”). It also applies to transactions that took place before February 3, 2015, but for which the relevant PRC tax has not yet been settled.