China has issued Circular Guo Shui Han  No. 585 that makes a listed firm liable to charge VAT on assets transferred to its holding company in an asset restructuring where it remains its listed company status.
According to KPMG China, such a transfer does not qualify for VAT exemption, which would be available to transfer of property rights over an enterprise as a whole. KPMG adds that the holding company is also liable to charge VAT if it reinvests such assets in other companies.
Compliance risks due to regulatory uncertainties will be decreased as a result of the Circular, says KPMG.