Company: CAAS
Filing Date: 2025-07-25
Form Type: F-4/A
Source: 0001104659-25-070492
Chunk: 134

Company: China Automotive Systems, Inc.
Filing Date: 2025-07-25
Form: F-4/A
Chunk 134
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 such capital gains are taxed in China, the applicable income
tax rate would be 10% for non-PRC institutional shareholders, and 20% for non-PRC individual shareholders. If the non-PRC shareholders
are U.S. residents that are eligible for PRC-US Tax Treaty benefits, whether capital gains should be taxed in China is unclear.

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Pursuant to Paragraph 5 of Article 12 of the
PRC-US Tax Treaty, gains from the alienation of shares of a company which is a PRC resident other than those mentioned in paragraph 4
(which refers to shares of a company the property of which consists principally of real property in the PRC) and representing a participation
of at least 25% may be taxed in China. Paragraph 6 of Article 12 of the PRC-US Tax Treaty further specifies that “[G]ains derived
by a resident of a Contracting State from the alienation of any property other than that referred to in paragraphs 1 through 5 and arising
in the other Contracting State may be taxed in that other Contracting State.” By virtue of this provision, the capital gains realized
by U.S. residents may be taxed in the PRC if the capital gains are considered as “arising in” the PRC. Under the EIT Law and
its implementing rules, the capital gains from transfer of shares may be considered as “arising in” the PRC if the enterprise
whose shares are transferred is “located in” China. If CAAS Cayman is considered a PRC resident enterprise, and if the Chinese
tax authorities take the position that a PRC resident enterprise is deemed to be located in China, the capital gains realized by the U.S.
residents from transfer of their shares may be taxed in the PRC depending on how the PRC-US Tax Treaty is interpreted and implemented
by the Chinese tax authorities.

United States Taxation

The following are the material U.S. federal income
tax consequences of (i) the Redomicile Merger to beneficial owners of Company common stock and (ii) the ownership and disposition
of CAAS Cayman ordinary shares to Non-U.S. Holders (as defined below). This discussion is based on the Code, applicable Treasury regulations,
administrative interpretations and court decisions as in effect as of the date of this proxy statement/prospectus, all of which may change,
possibly with retroactive effect.

This discussion applies only to