Company: MASK
Filing Date: 2025-06-24
Form Type: F-1
Source: 0001185185-25-000685
Chunk: 92

Company: 3 E Network Technology Group Ltd
Filing Date: 2025-06-24
Form: F-1
Chunk 92
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VI, may be difficult or impossible.

We face uncertainty regarding the PRC
tax reporting obligations and consequences for certain indirect transfers of the stock of our operating company.

In December 2009, the PRC State Administration
of Taxation (“SAT”) issued the Announcement on Strengthening Administration of Enterprise Income Tax for Share Transfers by
Non-PRC Resident Enterprises, or the SAT Circular 698, which became effective retroactively as of January 2008.

On February 3, 2015, the SAT issued the Announcement
of the State Administration of Taxation on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-Resident
Enterprises, or SAT Bulletin 7. SAT Bulletin 7 supersedes the rules with respect to the Indirect Transfer under SAT Circular 698. SAT
Bulletin 7 has introduced a new tax regime that is significantly different from the previous one under SAT Circular 698. SAT Bulletin
7 extends the PRC’s tax jurisdiction to not only Indirect Transfers set forth under SAT Circular 698 but also transactions involving
transfer of other taxable assets through offshore transfer of a foreign intermediate holding company. In addition, SAT Bulletin 7 provides
clearer criteria than SAT Circular 698 for 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. SAT Bulletin 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 enterprise
transfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an Indirect Transfer,
the non-resident enterprise, being the transferor, or the transferee, or the PRC entity that directly owns the taxable assets, may report
such Indirect Transfer to the relevant tax authority. Using a “substance over form” principle, the PRC tax authority may disregard
the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing,
avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC enterprise income tax, and
the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a
rate of 10% for the transfer of equity interests in a non-resident enterprises. Both the