What we do
Charltons provides high impact Hong Kong legal advice on corporate finance and capital markets transactions to both state-owned and private PRC companies. With almost two decades of experience in China, we are an established and trusted counsel to many Chinese enterprises. We have offices in Shanghai and Beijing, as well as long established relationships with top Chinese law firms in all of the major Chinese cities.
Our deep local knowledge and international perspective allow us to provide smart and practical advice to both PRC companies and foreign investors negotiating joint ventures and other investments in Chinese markets.
We also have long experience of bringing mainland Chinese companies to the Hong Kong market and have been involved in some of the largest and most significant deals in Hong Kong in the past decade. We have acted for major state owned enterprises as well as helping smaller dynamic companies take their first steps in the public equity markets. We also have experience of listings of B-shares on the Shenzhen and Shanghai Stock Exchanges.
We have a strong practice in China-related “outbound” M&A transactions. As PRC companies have risen to prominence in the global M&A market and more and more Chinese clients seek to expand globally, we provide support to Chinese acquiring companies in unfamiliar territories. We have acted on some of the most ground breaking outbound M&A deals in recent years, including Zijin Mining’s acquisition of Monterrico Metals, one of the first takeovers of a UK listed company by a Chinese acquirer. We have experience in the particular challenges faced by PRC companies in outbound M&A, from dealing with political sensitivities and investment restrictions on state owned enterprises in countries like the US and Australia to domestic concerns and regulatory approvals for outbound acquisitions that can complicate deal making and put Chinese bidders at a disadvantage, particularly in auction situations. The firm’s lawyers provide insightful and highly personalised service to clients, often working round the clock to deliver on transactions spanning multiple time zones.
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SFC Concludes on Hong Kong Investor Identification Regime and OTC Securities Transactions Reporting Regime
Tax applicable to PRC tax resident business vehicles
The main taxes which are applicable to PRC tax resident business vehicles include:
- corporate income tax, at the rate of 25% (unless reduced rate or special exemptions or deductions are applicable), assessed on global profits
- value added tax (VAT), usually at the rate of 17%, is payable on sale of goods, provision of services (including processing, repair and replacement, transportation and cultural services), sale of intangible assets and importation of goods into the PRC
- business tax, usually at the rate of 5%, is payable on transfer of immovable properties and provision of services not covered by VAT
- land appreciation tax, at the progressive rate between 30% and 60% depending on the amount of appreciation and applicable deductions, is imposed on appreciated value of real properties upon transfer
- stamp duty is payable on transfer of equity of PRC companies at the rate of 0.05% on each of the buyer and the seller upon each original equity transfer agreement
- dividends, interest and IP royalties paid to foreign corporate shareholders are subject to withholding tax of 10% which may be reduced depending on bilateral tax treaty (if any) entered with the jurisdiction of the corporate shareholders
In terms of transfer pricing, the PRC tax authority may make such adjustments it considers reasonable where transactions are carried out between a company and its related parties on which basis otherwise than arm’s length and which decreases the taxable revenue or income.
*The above is not intended to be a substitute for specific tax advice and is for general reference only. Advice from independent tax specialists or experts is recommended.