Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 48

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 48
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 the Notice on Issues Concerning the Foreign Exchange
Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed company, issued by SAFE in
February 2012. According to the Notice, employees, directors, supervisors and other management members participating in any stock incentive
plan of an overseas publicly listed company who are PRC residents must register with SAFE through a domestic qualified agent and complete
certain other procedures.

Failure to complete SAFE registrations may subject
our employees and the employees of the Current VIEs, and our directors, supervisors and other management members participating in our
stock incentive plans to fines and legal sanctions or limit the PRC subsidiaries’ ability to distribute dividends to us. Failure
to complete SAFE registrations may also limit our ability to make payments under the share incentive plans or receive dividends or sales
proceeds related thereto, or to contribute additional capital into the PRC subsidiaries in China. In addition, we face regulatory uncertainties
that could restrict our ability to adopt additional share incentive plans for our directors and employees under PRC law.

We may be treated as a resident enterprise for PRC tax purposes
under the PRC Enterprise Income Tax Law and may therefore be subject to PRC income tax.

Under the PRC Enterprise Income Tax Law effective
from January 1, 2008 and last amended on December 29, 2018, as well as its implementation rules effective from January 1, 2008 and amended
on April 23, 2019, an enterprise established outside of the PRC with a “de facto management body” in the PRC is considered
a resident enterprise and will be subject to a 25% enterprise income tax on its global income. The implementation rules define the term
“de facto management body” as an establishment that carries out substantial and overall management and control over the manufacturing
and operations, personnel, accounting and properties of an enterprise.

The State Administration of Taxation has issued
guidance, known as Circular 82, which provides certain specific criteria for determining whether the “de facto management body”
of a Chinese-controlled offshore-incorporated enterprise is located in China. Circular 82 only applies to offshore enterprises controlled
by PRC enterprises, not those, such as us, controlled by foreign enterprises or individuals.

However, the determining criteria set forth in
Circular 82 may reflect the State Administration of Taxation’s general position on how the “de facto management body”
test should determine the tax resident status of offshore enterprises, regardless