Company: DDC
Filing Date: 2025-08-05
Form Type: F-3/A
Source: 0001213900-25-072059
Chunk: 117

Company: DDC Enterprise Ltd
Filing Date: 2025-08-05
Form: F-3/A
Chunk 117
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is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise.

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According to SAT Circular
37, the Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, which was issued by the SAT
on October 17, 2017 and took effect on December 1, 2017 and was most-recently amended on June 15, 2018, the balance after deducting the
equity net value from the equity transfer income shall be the taxable income amount for equity transfer income. Equity transfer income
shall mean the consideration collected by the equity transfer or from the equity transfer, including various income in monetary form and
non-monetary form. Equity net value shall mean the tax computation basis for obtaining the said equity. The tax computation basis for
equity shall be: (i) the capital contribution costs actually paid by the equity transferor to a Chinese resident enterprise at the time
of investment and equity participation, or (ii) the equity transfer costs actually paid at the time of acquisition of such equity to the
original transferor of the said equity. Where there is reduction or appreciation of value during the equity holding period, and the gains
or losses may be confirmed pursuant to the rules of the finance and tax authorities of the State Council, the equity net value shall be
adjusted accordingly. When an enterprise computes equity transfer income, it shall not deduct the amount in the shareholders’ retained
earnings such as undistributed profits etc., of the investee enterprise, which may be distributed in accordance with the said equity.
In the event of partial transfer of equity under multiple investments or acquisitions, the enterprise shall determine the costs corresponding
to the transferred equity in accordance with the transfer ratio, out of all costs of the equity.

Under SAT Circular 7 and the
Law of the People’s Republic of China on the Administration of Tax Collection promulgated by SCNPC on September 4, 1992 and newly
amended on April 24, 2015 (the “Tax Collection Law”), in the case of an indirect transfer, entities or individuals obligated
to pay the transfer price to the transferor shall act as withholding agents. According to SAT Circular 7, where the transferee 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