Company: VSA
Filing Date: 2025-11-13
Form Type: 424B5
Source: 0001213900-25-109735
Chunk: 52

Company: VisionSys AI Inc
Filing Date: 2025-11-13
Form: 424B5
Chunk 52
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 abusive use of company structure without reasonable commercial purposes. In addition, Public Notice 7
provides clear criteria on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group
restructurings. However, it also brings challenges to both the foreign transferor and transferee of the “indirect transfer”
as they have to make a self-assessment as to whether the transaction should be subject to mainland China taxes and to file or withhold
the mainland China taxes accordingly. Where non-resident investors were involved in our private equity financing, if such transactions
were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may become at risk of
being taxed under Public Notice 7 and may be required to expend valuable resources to comply with Public Notice 7 or to establish that
we should not be taxed under Public Notice 7, which may have a material adverse effect on our financial condition and results of operations
or the non-resident investors’ investments in us.

In October 2017, the State Administration of Taxation
promulgated the Announcement of the State Administration of Taxation on Matters Concerning Withholding of Income Tax of Non-resident Enterprises at Source, or Circular 37, which provides certain changes to the current withholding regime, amends certain provisions
in Public Notice 7. For example, Circular 37 requires that the transferor shall declare to the competent tax authority for payment of
tax within seven (7) days after the tax payment obligation comes into being if the withholding agent fails to withhold the tax due or
withhold the tax due in full. However, according to Circular 37, if the withholding agent fails to withhold and remit the income tax payable,
or is unable to perform its obligation in this regard, as long as the non-resident enterprise that earns the income voluntarily declares
and pays the tax payable before the tax authority orders it to do so within required time limits, it shall be deemed that such enterprise
has paid the tax in time.

By promulgating and implementing these circulars,
the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of equity interests in a mainland China resident
enterprise by a non-resident enterprise. The PRC tax authorities have the discretion under Circular 59, Public Notice 7 and Circular
37 to make adjustments to the taxable capital gains based on the difference between the fair value of the equity interests transferred
and the cost of investment. We may pursue acquisitions in the future