Company: SCAG
Filing Date: 2025-01-06
Form Type: 424B3
Source: 0001213900-25-001215
Chunk: 178

Company: Scage Future
Filing Date: 2025-01-06
Form: 424B3
Chunk 178
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 under PRC law. See “Regulations Applicable to Scage International’s Business—Regulations Relating to Foreign Exchange Registration of Overseas Investment by PRC Residents.” In addition, the Ministry of Finance and the State Administration of Taxation (the “SAT”) have issued certain circulars concerning employee share options and restricted shares. Under these circulars, our employees working in China who exercise share options or are granted restricted shares will be subject to PRC individual income tax. The PRC Subsidiaries have obligations to file documents related to employee share options or restricted shares with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options or are granted restricted share. If our employees fail to pay or we fail to withhold their income taxes according to relevant laws and regulations, we may face fines or penalties imposed by the tax authorities or other PRC government authorities. If Scage International and / or PubCo are classified as PRC resident enterprises for PRC income tax purposes, such classification could result in unfavorable tax consequences to Scage International, PubCo and their non-PRC shareholders or warrant holders. Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with a “de facto management body” within China is considered a “resident enterprise” and will be subject to the enterprise income tax on its global income at the rate of 25%. The implementation rules define the term “de facto management body” as the body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. In 2009, the SAT issued the Circular Regarding the Determination of Chinese -ControlledOffshore Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies (the “SAT Circular 82”) (certain articles of which were repealed by the SAT on December 29, 2017), which provides certain specific criteria for determining whether the “de facto management body” of a PRC -controlledenterprise that is incorporated offshore is located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners like Scage International or PubCo, the criteria set forth in the circular may reflect SAT’s general position on how the “de facto management body” test should be applied in determining the tax resident status of all offshore enterprises. According to SAT Circular82, an offshore incorporated enterprise controlled by a PRC enterprise or