Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 49

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 49
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 of whether they are controlled by PRC enterprises.
We may be considered a PRC tax resident under the new tax law and may become subject to the uniform 25% enterprise income tax on their
global income, which could materially adversely affect their results of operations.

Dividends payable to foreign investors and gains on the sale
of Class A Ordinary Shares by foreign investors may become subject to PRC tax law.

Under the PRC Enterprise Income Tax Law and its
implementing rules, in general, a 10% PRC withholding tax is applicable to dividends payable to investors that are non-resident enterprises
that do not have an establishment or place of business in the PRC, or have such establishment or place of business but the dividends
are not effectively connected with such establishment or place of business, in each case to the extent such dividends are derived from
sources within the PRC. Similarly, any gain realized on the transfer of Class A Ordinary Shares by such investors is also subject to
PRC tax at a current rate of 10%, subject to any reduction or exemption set forth in relevant tax treaties, if such gain is regarded
as income derived from sources within the PRC.

If we are deemed as a PRC resident enterprise,
dividends paid on the Class A Ordinary Shares, and any gain realized from the transfer of the Class A Ordinary Shares, will be treated
as income derived from sources within the PRC and be subject to PRC taxation. Furthermore, if we are deemed as a PRC resident enterprise,
dividends payable to individual investors who are non-PRC residents and any gain realized on the transfer of the Class A Ordinary Shares
by such investors may be subject to PRC tax at a current rate of 20%, subject to any reduction or exemption set forth in applicable tax
treaties.

If we or any of our subsidiaries established
outside China are considered a PRC resident enterprise, it is unclear whether holders of the Class A Ordinary Shares can claim the benefit
of income tax treaties or agreements entered into between China and other countries or areas. If dividends payable to non-PRC investors
or gains from the transfer of the Class A Ordinary Shares by such investors are subject to PRC tax, the value of your investment in the
Class A Ordinary Shares may decline significantly.

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

On February 3, 2015, the State Administration