Company: GURE
Filing Date: 2025-09-22
Form Type: S-3/A
Source: 0001193805-25-001326
Chunk: 28

Company: GULF RESOURCES, INC.
Filing Date: 2025-09-22
Form: S-3/A
Chunk 28
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 Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or SAT Bulletin
7. SAT Bulletin 7 extends its tax jurisdiction to transactions involving the transfer of taxable assets through offshore transfer of a
foreign intermediate holding company. In addition, SAT Bulletin 7 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, as such persons need to determine whether their transactions
are subject to these rules and whether any withholding obligation applies.

On October 17, 2017, the SAT issued the Announcement
of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Bulletin
37, which came into effect on December 1, 2017. The SAT Bulletin 37 further clarifies the practice and procedure of the withholding of
non-resident enterprise income tax.

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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 as either transferor or 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 pays for the transfer is obligated to withhold the applicable taxes currently at a rate of 10% for the transfer of
equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to penalties under PRC tax laws if
the transferee fails to withhold the taxes and the transferor fails to pay the taxes.

We face uncertainties as to the reporting and
other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale
of the Shares in our offshore subsidiaries and investments. Our Company may be subject to filing obligations or taxed if our company is
transferor in such transactions, and may