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11.2. Tax Consequence of Business Emigration, Corporate Inversions and the Cessation of Business

If an enterprise with legal person status is converted to an individual proprietorship or partnership, or if an enterprise changes its domicile such as registration address from within mainland China to outside mainland China, the change will be treated as a liquidation of the old enterprise, followed by a distribution of its assets to its shareholder(s) and contribution of such assets to the new enterprise. The parties shall recognize a gain or loss based on the fair market value of the relevant assets and general taxation will apply.

If enterprise undertakes simple changes in legal form, such as change of name, or address within China, or from equity JV to cooperative JV, the general tax treatment will not apply, and the enterprise can simply modify its tax registration in China.