Company: CAAS
Filing Date: 2025-07-25
Form Type: F-4/A
Source: 0001104659-25-070492
Chunk: 93

Company: China Automotive Systems, Inc.
Filing Date: 2025-07-25
Form: F-4/A
Chunk 93
---
 account, and such factors will be analyzed according to the actual circumstances of the specific cases.

<div align='center'>52</div>

Tax on Indirect Transfer

On February 3, 2015, SAT issued the Bulletin
on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or Bulletin 7. Pursuant to Bulletin
7, an “indirect transfer” of assets, including equity interests in a PRC resident enterprise, by non-PRC resident
enterprises, may be recharacterized and treated as a direct transfer of PRC taxable assets if such arrangement does not have a reasonable
commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from
such indirect transfer may be subject to PRC EIT. When determining whether there is a “reasonable commercial purpose” in the
transaction arrangement, features to be taken into consideration include, inter alia, whether the main value of the equity interest of
the relevant offshore enterprise derives directly or indirectly from PRC taxable assets; whether the assets of the relevant offshore enterprise
mainly consists of direct or indirect investment in China or if its income is mainly derived from China; and whether the offshore enterprise
and its subsidiaries directly or indirectly holding PRC taxable assets have a real commercial nature which is evidenced by their actual
function and risk exposure. Pursuant to Bulletin 7, where the payer fails to withhold any or sufficient tax, the transferor shall declare
and pay such tax to the tax authority by itself within the statutory time limit. Late payment of applicable tax will subject the transferor
to default interest. Bulletin 7 does not apply to transactions of sale of shares by investors through a public stock exchange where such
shares are acquired on a public stock exchange. On October 17, 2017, SAT issued the Announcement of the State Administration of Taxation
on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or Bulletin 37, which was amended by the Announcement
of the State Administration of Taxation on Revising Certain Taxation Normative Documents issued on June 15, 2018 by SAT. Bulletin
37 further elaborates on the relevant implemental rules regarding the calculation, reporting, and payment obligations of the withholding
tax by non-resident enterprises. Nonetheless, there remain uncertainties as to the interpretation and application of Bulletin 7.
Bulletin 7 may be determined by the tax authorities to