Company: NCL
Filing Date: 2025-11-14
Form Type: 424B3
Source: 0001575872-25-000688
Chunk: 50

Company: Northann Corp.
Filing Date: 2025-11-14
Form: 424B3
Chunk 50
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 enterprise. Any such tax may reduce the returns on your
investment in our shares. Although up to the date of this prospectus, the Company has not been notified or informed by the PRC tax authorities
that it has been deemed to be a PRC resident enterprise for the purpose of the EIT Law, we cannot assure you that it will not be deemed
to be a PRC resident enterprise in the future.

We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.

In February 2015, SAT
issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises,
or “SAT Circular 7.” SAT Circular 7 provides comprehensive guidelines relating to indirect transfers of PRC taxable assets
(including equity interests and real properties of a PRC resident enterprise) by a non-resident enterprise. In addition, in October 2017,
SAT issued an Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, or “SAT
Circular 37,” effective in December 2017, which, among others, amended certain provisions in SAT Circular 7 and further clarify
the tax payable declaration obligation by non-resident enterprise. Indirect transfer of equity interest and/or real properties in a PRC
resident enterprise by their non-PRC holding companies are subject to SAT Circular 7 and SAT Circular 37. SAT Circular 7 provides clear
criteria for an assessment of reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the
purchase and sale of equity through a public securities market. As stipulated in SAT Circular 7, indirect transfers of PRC taxable assets
are considered as reasonable commercial purposes if the shareholding structure of both transaction parties falls within the following
situations: i) the transferor directly or indirectly owns 80% or above equity interest of the transferee, or vice versa; ii) the transferor
and the transferee are both 80% or above directly or indirectly owned by the same party; iii) the percentages in bullet points i) and
ii) shall be 100% if over 50% the share value of a foreign enterprise is directly or indirectly derived from PRC real properties. Furthermore,
SAT Circular 7 also brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer)
of taxable assets. Where a non-resident