The following question was asked by an attendee at a recent Proformative China M&A, Tax and Structure
Is there a holding requirement before dividends may be pulled from China - even if taxable? (Webinar Attendee Question)
Answers
Before a Chinese company can make dividend distribution to its shareholders, the company should put 10% of its annual profit into a statutory reserve every year until the total amount of the reserve reaches 50% of the registered capital amount. If the registered capital has been paid in full according to the capital contribution schedule, the company can distribute dividend from its retained earnings
1
Hi Jinghua Liu
I would appreciate some clarity. What is a "registered capital amount"? When is it not paid in full? What is "capital contribution schedule"?
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FP&A