Company: CAAS
Filing Date: 2025-08-04
Form Type: 424B3
Source: 0001104659-25-073486
Chunk: 93

Company: China Automotive Systems, Inc.
Filing Date: 2025-08-04
Form: 424B3
Chunk 93
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 result, gains derived from
such indirect transfer may be subject to PRC EIT. When determining whether there is a “reasonable commercial purpose” in
the transaction arrangement, features to be taken into consideration include, inter alia, whether the main value of the equity interest
of the relevant offshore enterprise derives directly or indirectly from PRC taxable assets; whether the assets of the relevant offshore
enterprise mainly consists of direct or indirect investment in China or if its income is mainly derived from China; and whether the offshore
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. Pursuant to Bulletin 7, where the payer fails to withhold any or sufficient tax, the transferor
shall declare and pay such tax to the tax authority by itself within the statutory time limit. Late payment of applicable tax will subject
the transferor to default interest. Bulletin 7 does not apply to transactions of sale of shares by investors through a public stock exchange
where such shares are acquired on a public stock exchange. On October 17, 2017, SAT issued the Announcement of the State Administration
of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or Bulletin 37, which was amended by
the Announcement of the State Administration of Taxation on Revising Certain Taxation Normative Documents issued on June 15, 2018
by SAT. Bulletin 37 further elaborates on the relevant implemental rules regarding the calculation, reporting, and payment obligations
of the withholding tax by non-resident enterprises. Nonetheless, there remain uncertainties as to the interpretation and application
of Bulletin 7. Bulletin 7 may be determined by the tax authorities to be applicable to our offshore transactions or sale of our
shares or those of our offshore subsidiaries where non-resident enterprises, being the transferors, are involved.

Regulations on Employment

Labor Contract Law

The PRC Labor Contract Law, which became effective
on January 1, 2008, and amended in 2012, primarily aims at regulating rights and obligations of employment relationships, including
the establishment, performance, and termination of labor contracts. Pursuant to the Labor Contract Law, labor contracts must be executed
in writing if labor relationships are to be or have been established between employers and employees. Employers are prohibited from forcing
employees to work above certain time limits and employers must pay employees for overtime work in accordance with national regulations.
In addition