Effective from October 1, 2024, until December 31, 2027, the new guidelines in China clarify the stamp duty treatments applicable to dutiable items involved in corporate restructuring and institutional reform. These guidelines outline specific situations where stamp duty applies and exemptions available to companies during restructuring.
Key Provisions
Stamp Duty on Business Accounting Books
Companies formed through restructuring or institutional reform are required to pay any outstanding stamp duty on incremental paid-in capital and capital surplus.
Debt-to-Equity Conversions: Incremental capital due to debt-to-equity conversions will generally incur stamp duty, except in cases where the conversion is part of a State Council-approved restructuring scheme.
Revaluation Adjustments: Stamp duty applies to incremental capital resulting from re-evaluation during restructuring.
Transfers Within Accounting Books: Incremental capital and surplus transferred from other accounting items are also subject to stamp duty.
Stamp Duty on Dutiable Contracts
If the rights and obligations under dutiable contracts are transferred to the surviving entity without changing the original tax basis, no additional stamp duty is required, provided the duty was previously paid.
Stamp Duty on Property Transfer Deeds
Restructuring Activities: Property transfer deeds related to changes in organization type, mergers, splits, or liquidations are exempt from stamp duty.
Administrative Adjustments: Transfers resulting from administrative adjustments directed by government departments responsible for managing state-owned assets (at the county level or higher) are exempt from stamp duty.
Internal Reallocations Within Investment Groups: Property transfer deeds involving land use rights, building ownership, facilities, and equity interests within the same investment group are exempt. This includes:
Transactions between a parent company and its wholly owned subsidiaries
Transfers among subsidiaries of the same parent company
Transfers within entities owned by the same natural person, including sole proprietorships, one-person limited liability companies, or private businesses established by that individual
These clarified stamp duty treatments aim to support companies undergoing restructuring or reform by providing specific exemptions and reducing compliance costs in applicable scenarios.
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