Company: NOAH
Filing Date: 2025-04-24
Form Type: 20-F
Source: 0001410578-25-000852
Chunk: 42

Company: NOAH HOLDINGS LTD
Filing Date: 2025-04-24
Form: 20-F
Item: Item 3
Chunk 42
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 the event that we are considered as a mainland China resident enterprise. If we are required to withhold such mainland China income tax under the EIT Law, your investment in our ADSs may be materially and adversely affected.

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We face uncertainties with respect to the application of the regulations on the administration of enterprise income tax for share transfers by non-PRC resident enterprises. 
The SAT has issued several rules and notices to tighten the scrutiny over acquisition transactions in recent years, including the Notice on Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-PRC Resident Enterprises issued in February 2015, or SAT Circular 7. Pursuant to these rules and notices, if a non-mainland China resident enterprise indirectly transfers taxable properties in mainland China, referring to properties of an establishment or a place in mainland China, real estate properties in mainland China or equity investments in a mainland China tax resident enterprise, by disposition of equity interests in an overseas non-public holding company, without a reasonable commercial purpose and resulting in the avoidance of mainland China enterprise income tax, such indirect transfer should be deemed as a direct transfer of taxable properties in mainland China and gains derived from such indirect transfer may be subject to the mainland China withholding tax at a rate of up to 10%. SAT Circular 7 has listed several factors to be taken into consideration by the tax authorities in determining whether an indirect transfer has a reasonable commercial purpose. However, in spite of these factors, an indirect transfer satisfying all the following criteria shall be deemed to lack reasonable commercial purpose and be taxable under the laws of mainland China: (i) 75% or more of the equity value of the overseas enterprise being transferred is derived directly or indirectly from the taxable properties in mainland China; (ii) at any time during the one-year period before the indirect transfer, 90% or more of the asset value of the overseas enterprise (excluding cash) is comprised directly or indirectly of investments in mainland China, or 90% or more of its income is derived directly or indirectly from mainland China; (iii) the functions performed and risks assumed by the overseas enterprise and any of its subsidiaries that directly or indirectly hold taxable properties in mainland China are limited and are insufficient to prove their economic substance; and (iv) the foreign tax payable on the gain derived from the indirect transfer of the taxable properties in mainland China is lower than the potential mainland China tax on the direct transfer of such assets. Nevertheless, an indirect transfer falling into the scope of certain safe harbors under SAT Circular 7 may not be subject to