Company: NCL
Filing Date: 2025-01-14
Form Type: S-1/A
Source: 0001575872-25-000059
Chunk: 48

Company: Northann Corp.
Filing Date: 2025-01-14
Form: S-1/A
Chunk 48
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 dividends payable by us to our investors and gains on the
sale of our shares may become subject to PRC withholding tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of
non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemed to be from PRC sources.
It is unclear whether non-PRC stockholders of our Company would be able to claim the benefits of any tax treaties between their country
of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your
investment in our shares. Although up to the date of this prospectus, the Company has not been notified or informed by the PRC tax authorities
that it has been deemed to be a PRC resident enterprise for the purpose of the EIT Law, we cannot assure you that it will not be deemed
to be a PRC resident enterprise in the future.

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

In February 2015, SAT
issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises,
or “SAT Circular 7.” SAT Circular 7 provides comprehensive guidelines relating to indirect transfers of PRC taxable assets
(including equity interests and real properties of a PRC resident enterprise) by a non-resident enterprise. In addition, in October 2017,
SAT issued an Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, or “SAT
Circular 37,” effective in December 2017, which, among others, amended certain provisions in SAT Circular 7 and further clarify
the tax payable declaration obligation by non-resident enterprise. Indirect transfer of equity interest and/or real properties in a PRC
resident enterprise by their non-PRC holding companies are subject to SAT Circular 7 and SAT Circular 37. SAT Circular 7 provides clear
criteria for an assessment of reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the
purchase and sale of equity through a public securities market. As stipulated in SAT Circular 7, indirect transfers of PRC taxable assets
are considered as reasonable commercial purposes if the shareholding structure of both transaction parties falls within the following
situations: i)