Company: MASK
Filing Date: 2025-06-24
Form Type: F-1
Source: 0001185185-25-000685
Chunk: 187

Company: 3 E Network Technology Group Ltd
Filing Date: 2025-06-24
Form: F-1
Chunk 187
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 enterprise by a non-resident enterprise.

In February 2015, SAT issued the Notice
on Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-PRC Resident Enterprises, or SAT Circular 7,
to supersede existing provisions in relation to the indirect transfer as set forth in Circular 698, while the other provisions of Circular
698 remain in force. SAT Circular 7 introduces a new tax regime that is significantly different from that under Circular 698. SAT Circular
7 extends its tax jurisdiction to capture not only indirect transfers as set forth under Circular 698 but also transactions involving
transfer of immovable property in China and assets held under the establishment, and placement in China, of a foreign company through
the offshore transfer of a foreign intermediate holding company. SAT Circular 7 also addresses transfer of the equity interest in a foreign
intermediate holding company broadly. In addition, SAT Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable
commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings. However, it also brings challenges
to both the foreign transferor and transferee of the indirect transfer as they have to determine whether the transaction should be subject
to PRC tax and to file or withhold the PRC tax accordingly. In October 2017, SAT issued the Announcement on Issues Relating
to Withholding at Source of Income Tax of Non-resident Enterprises, or the SAT Circular 37, amended in June 2018. The SAT
Circular 37 superseded the Non-resident Enterprises Measures and SAT Circular 698 as a whole and partially amended some provisions in
SAT Circular 24 and SAT Circular 7. SAT Circular 37 purports to clarify certain issues in the implementation of the above regime, by providing,
among others, the definition of equity transfer income and tax basis, the foreign exchange rate to be used in the calculation of withholding
amount, and the date of occurrence of the withholding obligation. Specifically, SAT Circular 37 provides that where the transfer income
subject to withholding at source is derived by a non-PRC resident enterprise in installments, the installments may first be treated as
recovery of costs of previous investments. Upon recovery of all costs, the tax amount to be withheld must then be computed and withheld.

Value-Added Tax

The PRC Provisional Regulations on Value-Added
Tax were promulgated by the State Council on December 13, 1993, which became effective on January 1,