Company: XHG
Filing Date: 2025-10-29
Form Type: F-3/A
Source: 0001213900-25-103499
Chunk: 34

Company: XChange TEC.INC
Filing Date: 2025-10-29
Form: F-3/A
Chunk 34
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 by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries
to make payments to us could have a material and adverse effect on our ability to conduct our business.” Each such entity in China
is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be
set aside, if any, is determined at the discretion of its board of directors. For more details about the employee welfare fund, see “Item
3 Key Information-D. Risk Factors-Risks Related to Doing Business in China-Failure to make adequate contributions to various employee
benefits plans as required by PRC regulations may subject us to penalties.” Although the statutory reserves can be used, among other
ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve
funds are not distributable as cash dividends except in the event of liquidation. In addition, the Enterprise Income Tax Law and its implementation
rules provide that a withholding tax at a rate of 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident
enterprises unless reduced under treaties or arrangements between the PRC central government and the governments of other countries or
regions where the non-PRC resident enterprises are tax resident. Pursuant to the tax agreement between mainland China and the Hong Kong
Special Administrative Region, the withholding tax rate in respect to the payment of dividends by a PRC company to a Hong Kong resident
enterprise may be reduced to 5% from a standard rate of 10%, if a Hong Kong resident enterprise owns more than 25% of the equity interest
in the PRC company. Under the Notice of the State Taxation Administration on Issues regarding the Administration of the Dividend Provision
in Tax Treaties promulgated in 2009, the taxpayer needs to satisfy certain conditions to enjoy the benefits under a tax treaty. These
conditions include, but are not limited to: (i) the taxpayer must be the beneficial owner of the relevant dividends, and (ii) the corporate
shareholder to receive dividends from the PRC subsidiaries must have met the direct ownership thresholds during the twelve consecutive
months preceding the receipt of the dividends. Further, the State Taxation Administration, or the STA, promulgated the Announcement of
the Certain Issues with Respect to the “Beneficial Owner” in Tax Treaties in 2018, which sets