Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 70

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 3
Chunk 70
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 jurisdiction of our shareholders. For example, for shareholders eligible for the benefits
of the tax treaty between China and Hong Kong, the tax rate is reduced to 5% for dividends if relevant conditions are met. In addition,
non-resident enterprise shareholders may be subject to a 10% PRC tax on gains realized on the sale or other disposition of ordinary shares,
if such income is treated as sourced from within the PRC. It is unclear whether our non-PRC individual shareholders would be subject to
any PRC tax on dividends or gains obtained by such non-PRC individual shareholders in the event we are determined to be a PRC resident
enterprise. If any PRC tax were to apply to such dividends or gains, it would generally apply at a rate of 20% unless a reduced rate is
available under an applicable tax treaty. However, it is also unclear whether non-PRC shareholders of the 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 the Company is treated as a PRC
resident enterprise.

Provided that our Cayman Islands
holding company, we, are not deemed to be a PRC resident enterprise, our shareholders who are not PRC residents will not be subject to
PRC income tax on dividends distributed by us or gains realized from the sale or other disposition of our shares. However, under Circular
7, where a non-resident enterprise conducts an “indirect transfer” by transferring taxable assets, including, in particular,
equity interests in a PRC resident enterprise, indirectly by disposing of the equity interests of an overseas holding company, the non-resident
enterprise, being the transferor, or the transferee or the PRC entity which directly owned such taxable assets may report to the relevant
tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence
of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding
or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee
would be obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident
enterprise. We and our non-PRC resident investors may be at risk of being required to file a return and being taxed under Circular 7,