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Category: Case Studies

Puzzle pieces with word tax
Case Studies

IIT and PE issues for a HK consulting firm

Background A HK consulting firm (‘A’) sent its consultant staff to Mainland China to provide consultant services to the clients of an advisory company in Mainland China (‘B’). A charges B consultancy fee of RMB 5m. Under normal circumstances, the consultant staff would not spend more than 183 days in any calendar year on the whole firm basis. However, starting from Year 2020, A’s staff kept staying in Mainland China because of COVID-19 pandemic. A engaged CW to assess the

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Stressed young woman checking bills, tax and calculating expenses at home
Case Studies

A Fallacy about the Requirements for Keeping Hi-Tech Status

Background A multinational group headquartered in Europe (“EU Co”) owns a Foreign-Invested Enterprises in Mainland China, FIE 1, which in turn holds 100% equity interest in FIE 2. FIE 2 mainly purchases raw material from local suppliers, manufactures machines, and sells to FIE 1 who then sells to corporate clients. FIE 2 is certified as a high-tech co based on the data from Year 5 to 7. Accordingly, it enjoys a 75% extra deduction on R&D expenses and a 15%

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A man puts wooden blocks with the word Capital
Accounting and Financial Reporting

Solutions for a Foreign-Invested Enterprise to Increase Capital

Background A multinational group headquartered in the US (“US Co.”) owns a subsidiary in Hong Kong. The Hong Kong subsidiary (“HK Co.”) is the shareholding company of a Foreign-Invested Enterprise (“FIE”) in Mainland China. The FIE’s primary business involves sourcing telecommunication products from China and locally selling to their corporate clients.   Challenge Initially, when the FIE was established, the registered capital was set at USD 200,000, which would be contributed by the HK Co. with funds sourced from the

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