Company: SISI
Filing Date: 2025-02-18
Form Type: S-1
Source: 0001493152-25-007187
Chunk: 21

Company: SHINECO, INC.
Filing Date: 2025-02-18
Form: S-1
Chunk 21
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 as a result may be subject to PRC withholding tax at a rate of up to 10%.

In order for us to pay dividends to our stockholders, we will rely on payments made from Shineco Life’s subsidiaries to Shineco Life and then to our Company. According to the Enterprise Income Tax Law of the PRC (the “EIT Law”), such payments from subsidiaries to parent companies in China are subject to the PRC enterprise income tax at a rate of 25%. In addition, if our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.

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Pursuant to the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC project. The 5% withholding tax rate, however, does not automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong project must be the beneficial owner of the relevant dividends; and (b) the Hong Kong project must directly hold no less than 25% share ownership in the PRC project during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong project must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to any dividends paid by our PRC subsidiaries to its immediate holding company, Shineco Life. As of the date of this prospectus, we have not applied for the tax resident certificate from the relevant Hong Kong tax authority. Shineco Life intends to apply for the tax resident certificate if and when our PRC subsidiaries plan to declare and pay dividends to Shineco Life.

To the extent cash is located in the mainland China/Hong Kong or within a mainland China/Hong Kong domiciled entity and may need to be used to fund operations outside of the mainland China/Hong Kong, the funds may not be available due to limitations placed on us and our subsidiaries by the PRC government. To the extent cash in and assets of the business is in the mainland China/H