Company: NCL
Filing Date: 2025-01-29
Form Type: S-1/A
Source: 0001575872-25-000097
Chunk: 49

Company: Northann Corp.
Filing Date: 2025-01-29
Form: S-1/A
Chunk 49
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 and administrative details for the determination of resident status and
administration on post-determination matters. Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled
by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria
set forth in SAT Circular 82 and SAT Bulletin 45 may reflect SAT’s general position on how the “de facto management body”
test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC
enterprises, PRC enterprise groups, or by PRC or foreign individuals.

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If the PRC tax authorities
determine that the Company’s actual management operations is within the territory of China, we may be deemed to be a PRC resident
enterprise for PRC enterprise income tax purposes and a number of unfavorable PRC tax consequences could follow. First, we would be subject
to the uniform 25% enterprise income tax on our world-wide income, which could materially reduce our net income. In addition, we will
also be subject to PRC enterprise income tax reporting obligations. Finally, dividends payable by us to our investors and gains on the
sale of our shares may become subject to PRC withholding tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of
non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemed to be from PRC sources.
It is unclear whether non-PRC stockholders of our Company would be able to claim the benefits of any tax treaties between their country
of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your
investment in our shares. Although up to the date of this prospectus, the Company has not been notified or informed by the PRC tax authorities
that it has been deemed to be a PRC resident enterprise for the purpose of the EIT Law, we cannot assure you that it will not be deemed
to be a PRC resident enterprise in the future.

We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.

In February 2015, SAT
issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises,
or “SAT Circular 7