Company: VSA
Filing Date: 2025-11-13
Form Type: 424B5
Source: 0001213900-25-109735
Chunk: 87

Company: VisionSys AI Inc
Filing Date: 2025-11-13
Form: 424B5
Chunk 87
---
 for Share Transfers

According to the Public
Notice Regarding Certain Enterprise Income Tax Matters on Indirect Transfer of Properties by Non-resident Enterprise (“SAT Bulletin
7”), promulgated by the SAT in February 2015, if a non-resident enterprise transfers the equity interests of a PRC resident
enterprise indirectly by transfer of the equity interests of an offshore holding company (other than a purchase and sale of shares issued
by a PRC resident enterprise in public securities market) without a reasonable commercial purpose, the PRC tax authorities have the power
to reassess the nature of the transaction and the indirect equity transfer will be treated as a direct transfer. As a result, the gain
derived from such transfer, which means the equity transfer price less the cost of equity, will be subject to PRC withholding tax at a
rate of up to 10%. Under the terms of SAT Bulletin 7, the transfer which meets all of the following circumstances shall be directly deemed
as having no reasonable commercial purposes: (1) over 75% of the value of the equity interests of the offshore holding company are
directly or indirectly derived from PRC taxable properties; (2) at any time during the year before the indirect transfer, over 90%
of the total properties of the offshore holding company are investments within PRC territory, or in the year before the indirect transfer,
over 90% of the offshore holding company’s revenue is directly or indirectly derived from PRC territory; (3) the function performed
and risks assumed by the offshore holding company are insufficient to substantiate its corporate existence; or (4) the foreign income
tax imposed on the indirect transfer is lower than the PRC tax imposed on the direct transfer of the PRC taxable properties. In October 2017,
SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income
Tax at Source (“SAT Bulletin 37”), which, among others, repeals certain rules stipulated in SAT Bulletin 7 and became
effective on December 1, 2017. The SAT Bulletin 37 further details and clarifies the tax withholding methods in respect of income
of non-resident enterprises.

There is uncertainty
as to the application of SAT Bulletin 7. SAT Bulletin 7 may be determined by the PRC tax authorities to be applicable to our prior private
equity financing transactions that involved non-resident investors, if any of such transactions are determined by the tax authorities
to lack