According to "Enterprise Income Tax Law", it stipulates that during the enterprises of foreign investment period, when calculating the taxable income, the cost of investment assets is not deductable. Investment assets refer to the enterprise in foreign equity investment and debt investment assets that formed.
Enterprises, in the course of transferring or disposal of investment assets, the investment cost of the assets may be deducted. Investment assets shall be in accordance with the following methods, to determine the cost of :-
(1) by paying cash investments to acquire assets with the purchase price as cost ;
(2) by means other than payment of cash, acquire investment assets to the fair value of assets and payment thereof as cost for relevant taxes.
Corporate transfers of assets, its net asset value are allowed in computing taxable income amount. Net assets are the relevant asset net of the tax basis of property in accordance with the provisions that have been deducted depreciation, depletion, amortization, reserve balance thereafter. According to the requirement of "Enterprise Income Tax Law", those between qualified resident enterprises dividends, bonuses and the other equity investment income are tax-free income. Those between qualified resident enterprises dividends, bonuses and other equity investment are gains. It refers to the resident enterprise or resident direct investment enterprises to obtain other investment income.
Such dividends, bonuses and other equity investment incomes are not being included in the resident enterprises held for from public offering and listing of shares in circulation for less than 12 months to obtain these return thereon. If the business are ready for transfer of ownership and the options are still has a lot of profits that is not allocated at this time, then it can be re-distributed dividends by first transfer of ownership by the way to reduce the price of transfer of ownership, thereby reducing the equity transfer income and reduce the tax burden.