Company: FORL
Filing Date: 2025-04-30
Form Type: 10-K
Source: 0001213900-25-037576
Chunk: 112

Company: Four Leaf Acquisition Corp
Filing Date: 2025-04-30
Form: 10-K
Item: Item 1
Chunk 112
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 non-PRC resident enterprises may be re-characterized and treated as a direct transfer of PRC taxable assets, if
such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise
income tax. As a result, gains derived from such an indirect transfer may be subject to PRC enterprise income tax. According to Bulletin
7, “PRC taxable assets” include assets attributed to an establishment in China, immoveable properties located in China, and
equity investments in PRC resident enterprises, in respect of which gains from their transfer by a direct holder, being a non-PRC resident
enterprise, would be subject to PRC enterprise income taxes. When determining whether there is a “reasonable commercial purpose”
of the transaction arrangement, features to be taken into consideration include: whether the main value of the equity interest of the
relevant overseas enterprise derives directly or indirectly from PRC taxable assets; whether the assets of the relevant overseas enterprise
mainly consists of direct or indirect investment in China or if its income mainly derives directly or indirectly from China; whether the
overseas enterprise and its subsidiaries directly or indirectly holding PRC taxable assets have a real commercial nature which is evidenced
by their actual function and risk exposure; the duration of existence of the shareholders, business model and relevant organizational
structure of the overseas enterprise; overseas income tax payable for the transaction of in direct transfer of PRC taxable assets; the
replaceability of indirect investment and indirect transfer of taxable assets in the PRC with direct investment and direct transfer of
taxable assets in the PRC by the transferor of equity and tax treaties or similar arrangements applicable in the PRC for income derived
from indirect transfer of taxable assets in the PRC. In respect of an indirect offshore transfer of assets of a PRC establishment, the
resulting gain is to be included with the enterprise income tax filing of the PRC establishment or place of business being transferred,
and would consequently be subject to PRC enterprise income tax at a rate of 25%. Where the underlying transfer relates to the immoveable
properties located in China or to equity investments in a PRC resident enterprise, which is not related to a PRC establishment or place
of business of a non-resident enterprise, a PRC enterprise income tax of 10% would apply, subject to available preferential tax treatment
under applicable tax treaties or similar arrangements, and the party who is obligated to make the transfer payments has the withholding
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